World Bank Group on the Potential of Private Cities

by | Mar 15, 2022 | News

Early this month the World Bank Group published an article on private cities in developing countries in its Policy Research Working Paper series. The paper series focuses on analytical studies with wide applicability across countries. All the authors are exclusively World Bank staff members. The article provides some interesting insights on the potential of the private sector developing urban areas but even more important the paper shows that the idea of private cities is finally hitting the mainstream.

In their paper Private Cities: Implications for Urban Policy in Developing Countries Yue Li and Martin Rama discuss the urbanisation process in developing countries. The paper analyses urban policy when the local government may struggle to assemble and develop a vast track of urban land while an unusually large private investor can do so.

While the authors acknowledge that academic papers on the topic are not something new and argue that “[d]iscussing these unorthodox policy recommendations should not be interpreted as advocating for the privatization of the urbanization process in developing countries”, it is important to highlight the fact that the discussion on private cities is not limited to neither academic discourse nor libertarian bubbles, anymore. The concept of private cities has the potential to change and improve the lives of many individuals in developing countries – but first, we might need to further expand the discussion into the mainstream.

In developing countries, there is an absence of capable and empowered local governments, therefore large private investors have become key actors in the urbanisation process of their fast-growing cities. To accelerate efficient urbanisation and support the emergence of more productive and liveable cities, the authors argue that it is needed to empower local governments. Nevertheless, building capacity takes time and empowering local governments may require constitutional changes with limited support among the elites. In the meantime, developing countries are rapidly urbanizing, consolidating inefficient city structures that will be costly to retrofit in the future. The key question is whether, and under which circumstances, private cities could lead to better urbanization outcomes.