Rapid, High Quality Urban

Expansion
Paul Romer
Cartagena, Aug. 27,2015
 The Growing Demand for
Urban Floor Space
• Suppose that people in cities spend 30% of their
income on housing
2
• Rent : R$ per sq m
• F = total urban floor space in m 2

• Y = total urban income

• R * Q = 30% Y
• To keep R constant, F has to grow as fast as Y
 New Urban Residents
Million per year
Million per year

Less Developed

More Developed
 Total Urban Residents

1. 3.6 billion urban residents now

2. 5.4 billion new residents in next 100 years
3. 5.2 in less developed regions
Employment Share 1800-2000

$7,000 $10,000

Note: Log($1000) = 7, Log($20,000) = 10

Employment Share 1800-2000

$7,000 $10,000

Note: Log($1000) = 7, Log($20,000) = 10

Employment Share 1800-2000

$7,000 $10,000

Note: Log($1000) = 7, Log($20,000) = 10

 Trend in US
11
US
2010
$10,000
10
Logarithm of GDP per capita
9

1955
8

$7,000
7 6

0 20 40 60 80 100
Urban Share of Population
 Trend in Brazil
11
US

$10,000
10
Logarithm of GDP per capita
9

Brazil
8

$7,000
7 6

0 20 40 60 80 100
Urban Share of Population
 Trend in India and Brazil
11
US

$10,000
10
Logarithm of GDP per capita
9

Brazil
India
8

$7,000
7 6

0 20 40 60 80 100
Urban Share of Population
 Trend in China
11
US

$10,000
10
Logarithm of GDP per capita

China
9

Brazil
India
8

$7,000 China
7 6

0 20 40 60 80 100
Urban Share of Population
 Trend in China and ROK
11
US

$10,000 ROK
10
Logarithm of GDP per capita

China
9

Brazil
India
8

$7,000
7 6

0 20 40 60 80 100
Urban Share of Population
Positive Feedback Loop
Urbanization

Formal sector
Public Private employment in
spending: spending: manufacturing
infrastructure housing

Human capital
GDP growth acquisition on
the job
 Role for Government?
Urbanization Industrial
Policy

Formal sector
Public Private employment in
spending: spending: manufacturing
infrastructure housing

Human capital
GDP growth acquisition on
the job
 Role for Government?
Urbanization

Formal sector
Public Private employment in
spending: spending: manufacturing
infrastructure housing
Education
Policy
Human capital
GDP growth acquisition on
the job
 Role for Government?
Urbanization

Formal sector
Public Private employment in
spending: spending: manufacturing
infrastructure housing

Human capital
GDP growth acquisition on
Infrastructure First the job
 Role for Government?
Public Space
Urbanization

Formal sector
Public Private employment in
spending: spending: manufacturing
infrastructure housing

Human capital
GDP growth acquisition on
the job
 Public Space

1. Arterial corridors for movement

of goods and people
2. Utility corridors
3. Recreation
 Movement

• sidewalks,
• bike paths, and
• roads for buses, cars, and delivery
vehicles
• new technologies …?
 Utility Corridors
• Water
• Sewer
• Electrical
• Gas
• Telecoms
• Central heating and cooling
• New uses …? subsurface transport of goods?
Amount of Public Space
• Midtown Manhattan
• 30% of land in grid

• Another 36% in parks

• Informal development
• not arranged as a grid

• as little as 5% of the land

1 km
1 km
Old New York

The 1811 Plan

Wall Street
Pine Wall Street
42nd Street

5th Ave
Room for Buses
Room for Pedestrians
What 5th ave
looked like when
it first opened
Informal
development
next to new
construction
Shanty towns
viewed from
new high rise
apartment
building
Valledupar
Valledupar
Valledupar
Montería
Montería