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Urban Property
 
Compact Townships as a strategy for economic development
Salim Rashid
2/1/2006
 

          What Are Compact Townships? A Compact Township (CT) is an agglomeration of houses, hospitals, schools, markets, rural industries and local governmental units that provide all basic services to a population of about 20,000. It is to be largely self-governing and self-financing. The size is small enough for traffic within the CT to be conducted by non-motorized vehicles and for motorized traffic to be thus isolated from the CT itself. The CT will thus be well connected yet environmentally friendly. As the size is small enough to provide effective protection from floods, the CT's will permit Bangladesh to do with many fewer embankments and thus encourage the re-emergence of a wetlands environment as well as serve to stimulate the renewal of freshwater fisheries, so critical to the nutrition of Bengalis. Mirpur Staff College and BARD in Comilla - each about 100 acres - are attractive examples. So a tentative plan is to have about 200 - 300 acres for each such CT, or about three per square mile.
Eventually some 7000 of these will become the basic rural landscape of Bangladesh, supplemented by a scattering of homesteads and some remaining number of the existent 68,000 villages. This is rather a mammoth undertaking! The general idea of gaining economies by agglomeration is an extremely simple one and has been the staple of several branches of Economics and Regional Planning. All I have done is to give it concrete shape to suit the particular current situation of BD. My principal reason for writing is to argue that the concept, though simple, is important, necessary and practicable.
Planning has come into considerable disrepute in recent years, so it is well to point out that most failures of planning tried to settle outcomes or to force people into certain actions favoured by the planner. For example, when it is insisted that a Steel Mill must be built. However, no one has complained about the expansion of education or of roads and infrastructure - so, to be careful, one has to say that suitable planning of inputs is still a desirable option. The question is whether the CT's will in fact stimulate the appropriate inputs. Furthermore, all moves into the CT's will be voluntary. No force will be used. The only inducement will be an indirect one. No Government can be asked to support that which is beyond its means. It can be asked to provide education and health, but only in an affordable way. Those who choose to move into the CT's will have easy access to education, health, banking, family planning etc. Those who do not so move are still eligible for such benefits, but it will be so much harder for them to gain access.
How is this to be done?
The WB says we must urbanise. Indeed, rural BD has not grown in the last decade. But the WB proposal seems a non-starter on the basis of its own facts. Consider the description of Dhaka City today:
When only 20 percent of Dhaka's daily output of solid waste is collected everyday and the country's total output is likely to rise eight to ten times by 2020, it is not difficult to imagine cities overwhelmed and even fatally polluted by their own refuse. Unless, they perish first of thirst. Urban demand for water is due to rise from 645 million gallons a day to 3,300-4,200 million gallons. Already only one half of the country's city dwellers have access to clean, safe drinking water. Dhaka has only a single sewage treatment plant - a completely inadequate one - and a sewage system that covers only one third of its area. Thirty percent of the capital's people either use open latrines or none at all. (p10)
Now consider the projections for the future:
More and more of that future will take place in cities and towns and in construction and in the informal and service sectors. As a final component of the setting for growth, the process of urbanisation and its attendant activities have to be examined both for the promise they hold and the threats they raise. In 1996 the urban population of Bangladesh stood at 24 million, one fifth of the country's population. By 2020 it is projected to be nearly 80 million, not much short of half the total. Together Dhaka (with an estimated 15-20 million inhabitants in 2020, compared to over 8 million now) and Chittagong (doubling to 9-12 million by 2020) will be the megacity homes to one of every four Bangladeshis. Another one of four will live in urban areas that are already sizeable (Rajshahi and Khulna) and in towns that may now be sleepy rural centres but that are destined, because of their location on road and rail routes that are axes of development, to boom.(p10)
Anyone who has seen the reality unfold in Dhaka City will know that keeping Dhaka livable with 15 million people is a sufficient challenge. Add to this another 10 million in Chittagong. Suppose the smaller cities grow to a million each and there are ten of them. If rural BD remains at 100 million, this leaves 35 million unaccounted for! The WB does not face this issue squarely after having set up the facts to make it painfully evident. Simply to claim that the answer "must" lie in urbanization and that this challenge can be met is not very hopeful.
In the face of the above, what well-grounded reasons can an inquiring, thinking Bangladeshi have to be hopeful about the future? Man is an animal who lives for the future. Hence, he is also the only animal who has sorrow at the thought of "what might have been". The people of Bangladesh are quite ready to both sacrifice and to work. But some worthwhile end must be visible. It is not current poverty that hurts as much as the indefinite future. An ordinary Ukrainian woman expressed this very clearly in explaining the difference between Poland and Ukraine: "What I notice in Poland is not that the people are better off. Many dress like we do. I see that in their faces there is tranquility. They know where they are going. We do not. Whatever happens, we need tranquility," she said.
What then is to be done? One solution is to just continue as we are. "Somehow things will get done when the situation becomes sufficiently unbearable." Since we have refused to let foresight guide us in avoiding the unbearable, one corollary of this approach is that we will always be dealing with the unbearable.
The WB is resolutely against such a policy. It definitely wants BD to strive for better things, but how? The WB itself has no concrete suggestions much beyond the Washington Consensus, i.e. "sound fundamentals" in Macroeconomics and Privatization. I consider this approach to be thoroughly inadequate. The hardest social problems involve coordinating the actions of people. If the Government is not to take a stand on this issue, then who is? Governments must help co-ordinate the activities of its citizens and enable the growth of self-governing civic bodies. It should also consider what sorts of tastes are being developed. If people take pleasure only in selfish activities then society will systematically become more self-centered. The example and exhortation of Government becomes a factor in guiding Economic Development. BD is a Rice Economy. All rice economies are crucially dependent on Water, a resource that is scarce, mobile and indispensable. Markets can fail to work well with such goods. Some Communal ethic is frequently necessary for practical and effective solutions. No one considers Taiwan to be other than a Private enterprise economy, yet Taiwan has one of the most successful communities based Water sharing schemes.
The WB does not face the historical point that growth occurs in agglomerations - Consider the start of the most freelance style of entrepreneurship visible today, the Computer Industry. It has minimal set-up costs and finance is available. So why is it focused upon three places in the USA? Or look at the furniture industry in the USA? Or leather goods in Italy? Or automobiles in Germany? There is also a second point that may be relevant - growth is typically focused upon a few years, say a critical decade. This is true for countries as diverse as Japan and Italy. One concentrated effort then sets the stage for the future.
The CT's seem to be part of a solution, they are certainly not a solution by themselves, but I will welcome any alternatives. Just so long as the magnitude of the problem is properly raised. The exact numbers that follow are not as important as the orders of magnitude they indicate. I will be glad to receive any corrected figures.
What is mistaken about the past approach?
First, there has been an absence of vision. What is the economic future of Bangladesh supposed to consist of? If we look at the largest schemes of Public expenditure, many of them consist of Water Projects. In reading many a report and talking to many an expert, it became clear that for almost fifty years the overriding concern has been to avoid famines. How can anything positive arise, except by accident, from a goal that is so overwhelmingly negative - avoiding disaster?
For better for worse, we must try to visualize what BD will look like, may look like, in another 20 and another 50 years. The Water Resource projects are then justified only by the role they will play within this vision of the future. Why should BD grow all its own rice? Let BD make computers and buy what rice it needs from Arkansas.
The dominant solutions proposed hitherto in BD are engineering solutions to the Water problem. I was led to the CT proposal after examining the Meghna-Dhanagoda project. Incidentally, this is an embankment that held during the recent floods, due to the heroic efforts of the BWDB, and the support of the people and the NGO's. Uneconomic solutions even in financial terms and a poor one when we add the distraction to the human capital of BD. If BD is to prosper, safety has to be assured to people and security to investment. Why not plan to make the CT flood resistant and then stop pouring money on the embankments? The engineering solution proposed by the French Plan after 1988 was to spend 6 billion dollars. If we simply allowed the funds to be invested in a good Mutual Fund at, say, 15 per cent, the country would have an effortless growth of GDP of 2-3 per cent and have the 6 billion in its pocket as well! This would preserve the Wetlands and allow fish to flourish. It is a plan with no maintenance costs, unlike the embankments. BD is a deltaic plain. This is the fundamental fact we have to keep in mind as we plan.
Secondly, research on BD has been undertaken in mammoth quantities. But it is overwhelmingly project based. However good the results of the individual project, when the project folds, perhaps because donors have other interests, the good work dies. There is no cumulative impact. It is high time a more integrated vision was emphasized at the expense of detailed expertise. It is as though someone came along and taught us to milk a cow more efficiently. End of project. Then someone saw that the extra milk could not be marketed, so a marketing project began. This did not solve the problem since no one had dealt with the pasteurizing and purity of the milk. By the time the third project becomes effective the original milk producers have become tired of having unsold milk on their hands and gone on to selling peanuts. For two very pertinent examples of research that has gone to waste, consider the Intergenerational fertility figures in BJPA, July 1990 and the Time study of Secretariat activities in BJPA January 1990. Hardly anyone I know reads this journal and it has currently stopped publication!
Is a reasonable trial feasible?
This brings up the question of financing. The important point to bear in mind is that all the benefits proposed such as Education or Medicine are no innovations. These promises have already been made to the people. The expenditures upon them are due. The real question is - how can we effectively do what has already been promised? The exact numbers I provide below are not of primary significance, only the orders of magnitude are.
If a four story building takes about $150,000 to build and a school/community center tales about $100,000,then a total of 200 houses in a CT will require a total of 20 million $. Once we add another 5 million for the accompanying infrastructure, each CT requires about $25million for its construction. Can we finance a reasonably large number of Pilot CT's?
To refine the initial calculation, let us consider the savings in roads, electricity and marketing that will arise from the CT's. One will not have the obligation to take electric lines into the interior at Govt cost, smaller village roads can be left in an unfinished state and preserve the environment and the countryside.
We can approach these figures in a more desegregated manner for the case of roads and electricity. Suppose we did not extend electricity to villages or pave their roads but instead tried to use the money to make Compact Townships. Through the kindness of Mr. Kamaruzzaman and Mr. Colin Jack of USAID I find that the average kilometre of rural electric line costs about $11,000. Similarly, through Mr. Kashem of LGED (RRIMP2), I find that Rural Roads cost between 25-35 lakhs if fully paved, for brick soiling it is 17-22 lakhs and for WBM about 20-25 lakhs). Incidentally, although I went to them to get some facts, all of them were very supportive of the CT's as soon as I explained the idea.
The REB booklet of 1997 gives us very helpful data on work done and works yet to be done. From the data for work already done we can calculate the number of kilometers of electric line per village. This actually varies quite a bit, from 7km per village in Chittagong, to 1.8 km per village in Kurigram (probably questionable), with a mean around 3.5 km per village. The same database tells us the villages yet to be connected. By taking the product and adding over all PBS's we see that about 178,390 kms of lines yet need to be laid. This is a total cost of about $1.962 billion, which is a potential saving.
Consider the additional savings in not having to fully develop rural roads. If we assume the (minimal) additional cost of developing each rural road is Taka 10 lakhs per km, this works out at $20,000 per km. One has to make a guess about the relative lengths of electric lines and roads, but as lines go into houses while roads do not, we should probably reduce the length of electric lines previously calculated by 25% to give 133,800 kms of roads yet to be developed. If this money is saved by the development of the CT's then we get an additional 133,800x 20,000=2.68 billions.
So an aggregated analysis using only two, admittedly large, items gives us a potential savings of $4.5 billion ----to be used instead in developing CT's, about 200 of them. The difference between the two patterns of expenditures is that the CT's look directly to the future and hold out more hope than the current scheme.
The situation with rural roads is particularly vexing. Bangladesh is a land-scarce country, a fact that scarcely needs repetition. Due to its topography, soils and floods road building costs in BD are among the highest in the world. One would think that BD would economise on rural roads. Yet BD has the highest density of rural roads in the world according to the BANGLADESH RURAL INFRASTRUCTURE STRATEGY STUDY (World Bank, 1997)! What is this due to, if not our dispersed village homesteads?
Now to the larger, long run picture. The WB sees a total expenditure of $325 billion over the next 25 years, or about $13 billion per year. This is a lot of money! How is it to be spent?
Investment Requirement to 2020 (in billion $)
Sectors Annual Average Total
1. Social sector 1.0 25.0
2. Urban housing &
infrastructure 4.0 100.0
3. Physical infrastructure 3.0 75.0
4. Industry & Agriculture 4.0 100.0
5. Environment & other 1.0 25.0
TOTAL 13.0 325.0

The WB sees BD as having to attract a good deal of FDI to finance this goal. The CT proposal is a distinct alternative. If we subtract an arbitrary estimate from the numbers above to finance the CT's, since the WB plan is based on what I consider an unrealistic growth of urban areas, we "see" that about $5 billion can be set aside to achieve the goals of the CT's. For 2000 CT's till 2020 we need $50 billion. As those who move into the townships will be expected to pay for their benefits this is an expense but it may not be a cost as much of it will be recovered over time. The land can perhaps be acquired in exchange for the lands of those who are moving in. Regardless, the crude calculation suggests that I can be wrong by a factor of three and still have the CT's as a viable proposition.
On cannot pass by some ancillary benefits. The possibility of using local wealth to provide low-cost financing as an intermediary between Grameen Bank type loans and commercial banks. Or consider some possibilities in physical planning. The most reliable data I have now is that we have 68,000 villages in BD: 13,817,000 households in rural BD, with .07 acres of homestead per household. There are a total of 1,949,000 ponds. Suppose only 80% of the villagers agree to enter the CT's. Just to get some orders of magnitude, what does this mean? 10,000,000 households freeing up about .05 acres each, they need .02 acres each in the CT's, this will save 500,000 acres for fruits and vegetables. Similarly, we free up about 1,500,000 ponds for scientific fisheries. What large implications can this have for nutrition, micro-nutrients and the general health of the populace? These are orders of magnitude that surely require closer examination.
How will CT's help economic growth?
First of all, they will at least provide for the 35-40 million who are 'missing a home' in the WB plan. To say more requires some preliminaries about the nature of Economic Growth.
The major problem is said to be population control. From a policy viewpoint, this is a mistake. First, due to the age-structure of the population, the only way population growth will stop is if we legitimize killing people. Second, it is not at all clear that increased populations necessarily reduce food availability. The graph of population density against food availability is positively sloped over any reasonable length of time. Third, Malthusian fears probably do more harm in guiding policy than would a policy that simply ignored the population problem. Fourth, fertility is already declining very sharply in countries such as BD. There are reasons to believe that this is due more to women's awareness and to social changes than to the variables posited by economists. Finally, of all the variables used to predict actual family size, the most effective by far is 'desired family size'. Real change occurs when people change their minds. Economists have too narrow a focus when they try to make social change a corollary of economic change. Insofar as attitudes are mostly changed by social interaction, the CT's will provide the maximal potential for reducing future population.
Secondly, entrepreneurship is the driving force for growth in a Market Economy. Nothing stimulates this more than the perception of high profits. No Government should be in the business of promising profits but it can provide an enabling atmosphere. If we separate out the tasks into Sales, Marketing, Management and Production, we see that the bureaucratic obstacles to each are different. While Commerce can generally operate under known constraints, it is otherwise with Production. It is hoped that the self-government of the CT's will serve to stimulate this last prerequisite. Indeed, tax collection and local expenditures will be under the direct control of each Township, several of whom can be stimulated into a friendly rivalry. If the central government focuses upon making the principal Roads fast and safe these CT's will be able to provide nurturing places for the growth of subcontracting and rural based industries. China will serve as a useful model.
Thirdly, Technology is the great force leading to continual productivity. However, the potential of the small CT's is hard to appreciate because of some misconceptions about Technology. It is assumed that Technology is largely dependent upon Science, especially basic Science. However, according to such authorities as Solla Price, it is arguable that Science depended more upon Technology than vice versa. Historians of the Industrial revolution have noted that the famous names may have patented the machinery, but between 1/3 to of all known productivity improvements have no author. Some nameless skilled mechanic made a minor adjustment, which was then improved upon by some other nameless mechanic. Cumulatively, these small improvements made an enormous difference.
The reluctance to consider small, specialized and flexible production units is based upon the belief that only large-scale production can be efficient. However, the secret of Japanese JIT production lies in the ability to adapt the workplace to skilled, co-operative workers who take participatory pride in what they do. This pattern will also form a welcome contrast to the dead-end efforts of garment workers, even after a decade of RMG prosperity. In other words, the CT's can reasonably be expected to provide a stimulating nursery for the most important inputs involved in economic growth---education, entrepreneurship, and technology.
I have no special attachment to the CT if it is not viable.
Let me repeat, what are the alternatives? How will 50 million people find work, housing and food over the next twenty years - not to mention the additional millions over the next fifty years?
...........................................
The writer is Professor of Economics, University of Illinois, USA
(The article has been taken from Internet)

 

 
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