Market Enablement and
the Urban Sector
This book explores and evaluates urban-sector and development policies in the context of market enablement. By articulating the linkages between this development paradigm and the way in which policy responses are enacted by different actors in the urban sector, the book provides an understanding of both the factors driving this policy framework and the impacts of these policies on urban-sector policies and programmes. Thus, while the substantive focus of this book is on the urban sector in the developing world, this provides a window on the wider world of the political economy of urban development under conditions of the neo-liberal development agenda. This is a policy environment driven by globalization, the neo-liberal macro-economic package of market enablement and structural adjustment, and its associated instruments of urban management reform, decentralization and ‘good’ governance programmes: these constitute the underlying themes of the book. This development paradigm has dominated the dynamics of urbanization and the spatial, social and economic patterns of urban development for nearly two decades. Despite the mediating outcomes of United Nations (UN) Habitat II and the emergence, in 1999, of poverty alleviation strategies and ‘pro-poor’ development policies aimed at mitigating the adverse impacts of market enablement, multilateral and bilateral development agencies and donors continue to promote the relevance and enduring necessity of this agenda. Cities, as the leading sector for economic development, provide the main platform upon which this paradigm is enacted; but since cities are also where concentrations of poverty and where the challenge of access to land, shelter and basic infrastructure are at their most acute, the urban sector displays the impacts of the paradigm most dramatically. Urban land and shelter provision constitute much of the subject matter of the book.
Urban economies and urban needs and policies are driven by external, as well as internal, forces. The interplay between domestic and international agendas (foreign, state, local interests), crucial in determining policies and outcomes, is also a central theme that the book explores. Externally, governments in the developing world have been compelled to respond to the neo-liberal policy agenda of donors and its institutional apparatus – for example, aid conditionality, diminution of the public sector's role in regulating development in the urban sector, and expansion of the private provision of public goods. These pressures have vied with domestic interests, such as the need to retain state credibility and legitimacy while simultaneously resisting the potential threats to existing power structures, which externally generated radical reform of the urban sector could induce. The book examines the role of the state – at both national and city/municipal levels – as the mediator between these often-conflicting external and domestic agendas.
Within this context, the book has twin objectives that structure the content. First, we attempt to link concepts to policy and practice. Here we seek to explore how changes in development theory – from welfare to market enablement – political economy and institutional frameworks have redefined the role of the state vis-à-vis the urban sector, and how policies within the sector (for example, for shelter and land) are determined and influenced by these factors. Second, in exploring the interplay between the current development paradigm, the policy apparatus and the lessons learned from practice, the book explores the disjunctive relationships between policy expectations and outcomes in the urban sector.
In seeking to articulate the relationship between external and state interests in urban-sector development strategies, much research on urban development has tended to reinforce the dichotomy rather than to bridge it. On the one hand, political economy analyses tend to conceive of the relationship in a political or social vacuum, concentrating on internal domestic factors, such as the realities of established power structures, while underplaying the impact of external factors, such as international development agendas, or vice versa. These perspectives have tended to emphasize social class and state power at a domestic level, or geopolitical and macro-economic variables in the international context. On the other hand, distinct from these attempts to conceptualize the relationship between the urban sector and political economy, the literature is dominated by micro-level; and technocratic evaluations of foreign aid-funded projects.
Taking these contrasting perspectives into account, the book argues that in order to provide a more penetrating understanding of critical urban policy processes and dynamics, such as in the shelter sector, these do, indeed, have to be located in a broader socio-economic and political context. Policies and outcomes generally reflect technocratic responses to problems that are largely structural in nature. This gap between the structural and technocratic explanations of policy-making and implementation is, thus, a central theme in the book. At the same time the book also recognizes that, important though structural changes are – for example, in terms of development paradigms, institutional reform or political transformation – they may not always appear to be the sole determinants of policy shifts in urban-sector programmes and policies. At times it may be that a combination of short-term and pragmatic international objectives and the domestic interests of the state are equally instrumental in policy shifts and modifications in approaches. Nevertheless, the interplay between the structural, the technocratic and the pragmatic remains core to the purpose of the book.
A brief review of the phenomenon of rapid urbanization follows. The chapter then turns to the principal themes that underpin the book and examines their significance in the context of the urban sector; this comprises two main parts. First, the development of the neo-liberal agenda of market enablement and globalization is outlined, focusing on the developing world. The next section turns to cities in the developing world to explore, at a general level, some of the principal impacts of the market enablement paradigm on the urban sector. The final section outlines the substantive chapters and their connection to the overall themes of the book.
RAPID URBANIZATION IN THE DEVELOPING WORLD
Although estimates vary, between 10 and 13 per cent of the world's population lived in cities in 1900. Yet, a century later, soon into the new millennium, half the world's population will be living in cities: this is anticipated around 2005. In the year 2000, there existed 28 mega-cities with more than 8 million inhabitants in each. The population of the mega-cities alone (at nearly 300 million inhabitants), almost equates to the total urban population of the world at the beginning of the last century. The phenomenon of urbanization is perhaps one of the most profound and significant changes of the last century.
Despite the drive to urbanization during the last century, less developed parts of the world, those with the steepest demographic curves, have yet to fully experience that process. Thus, in another 20 years, by 2025 if current urbanization trends continue, over 60 per cent of the world's population (or about 5.2 billion people) will be living in cities: this, despite the fact that, globally, urbanization trends are slowing worldwide (UNCHS, 2001a).
A second and perhaps even more striking characteristic is the changing distribution of the world's urban population. Whereas, in the developed world, both the overall population levels and the very high proportion living in urban areas are relatively stable, it is in developing countries where by far the largest proportion of the growth of urban population has and will continue to take place.
During the 50 years leading up to the end of the 20th century, the urban population in the developing world increased from about 300 million to nearly 2 billion. This figure will double again by 2025, when nearly three-quarters of the world's 5.2 billion urban dwellers will be living in the developing world. Whereas there were only 31 millionaire cities in the developing world in 1951, by 2000 there were over 400. Of the 28 mega-cities in 2000, 22 were in the developing world. By 2010, 21 of the 26 cities of 10 million plus will be in the developing world and 21 of the 33 cities with populations in excess of 5 million will be in the developing world. While it is easy to overemphasize the phenomenon of mega-cities, what they do illustrate is the tendency towards high degrees of urban primacy as another problematic characteristic of the distribution of urban population in developing countries.
But if there is a dynamic of cities, there is also the dynamic in cities. With some cities (for example, Lagos) doubling their size perhaps every 10 to 12 years, and some evidence to suggest that, until recently, so called ‘secondary cities’ (often low on the development agenda) were expanding at an even faster rate, urbanization is perhaps one of the most problematic outcomes of the development process. This scale of growth compounds the problem in cities. With cities in the developing world often accommodating the majority of their populations in informal and squatter settlements, offering limited or non-existent basic urban services and deteriorating environmental conditions, the rapidity of development renders irrelevant most planning strategies and regulatory instruments. Currently, UN Habitat estimates that nearly 1 billion urban dwellers – one sixth of the world's population, one quarter of the world's urban population and almost one half of the urban population in the developing world – live in urban locations, which are often illegal, but always characterized by severely impoverished physical, environmental and social conditions. Of course, the distribution is critical here: only 2 per cent of the urban population of the 30 richest countries is estimated to inhabit such localities, in comparison with 80 per cent of city dwellers in the 30 least developed countries (UNCHS, 2003). In the informal settlements of Nairobi, Mumbai, Karachi and Dhaka, alone, the populations approach 1 million in each case. If present predictions are sustained, one in three of the world's population will live in similar conditions of urban impoverishment in 30 years’ time.
Driving urban growth is the diversity and concentration of economic activity in cities, which ensures that they are the leading sector of macro-economic development. For example, São Paulo contributes 40 per cent of Brazil's gross domestic product (GDP), while estimates suggest that 80 per cent of the GDP of countries in the developing world is generated in cities. The urban housing sector is crucial. Typically, housing investment may account for between 8 per cent (UNCHS, 1993) and 20 per cent of gross national product (GNP) (Malpezzi et al, 1990), representing up to 50 per cent in some situations. Whether in the formal or the informal sector, urban housing investment is a significant multiplier, creates substantial forward and backward linkages, stimulates small-scale enterprises, increases inter-household income transfers (Spence et al, 1993) and adds significantly to capital formation in the national economy by up to 30 per cent (UNCHS, 1984, 1993; World Bank, 1993, pp62–64).
But this privileged and vital role is problematic in equal measure. The necessity for intervention on social and environmental grounds is counterbalanced by the commensurate need not to compromise the economic productivity and potential of cities – the nub of the market enablement reform package for cities clearly set out in the World Bank's policy statement on Urban Policy and Economic Development: An Agenda for the 1990s (World Bank, 1991).
In short, the problems of cities and within cities are set to increase. These contemporary processes and patterns of urbanization raise fundamental questions about equity and the impact of development. Highly skewed patterns in the spatial and social distribution of poverty and wealth ensure that poverty levels remain very high and are deteriorating further in many cities. As the United Nations Development Programme's (UNDP's) work on human development indicators illustrates, cities in the developing world are very unequal places. Issues of sustainability, efficiency and high externalities, notably in environmental terms (Zetter and Moataz Hassan, 2002b), also raise questions of great significance, which provide the agenda for the Habitat report on cities (UNCHS 2001a, 2003).
Yet, despite the attendant problems that this process produces, it remains all but impossible to restrain either the growth or the inequality of cities in the developing world. There is little evidence that intervention at any level has done much to manage the process of rapid urbanization in a more equitable way or to achieve development that satisfies broader conceptions of efficiency, equity or sustainability (for example, in terms of employment generation, physical and social infrastructure and the ecological footprint of cities). The legacy of ineffective planning systems and instruments, limited institutional capacity and weak state legitimacy to intervene are persistent features of the urban landscape in much of the developing world. Cities are the engines of growth for developing countries. The imperative of economic growth and current market enablement models continue to drive the spontaneous, unplanned growth of cities at an unprecedented scale. It seems likely, therefore, that many of these processes will continue, irrespective of planning or political intervention (Zetter, 2002; Zetter and White, 2002).
THE NEO-LIBERAL AGENDA: MARKET ENABLEMENT
This chapter turns, now, from a brief contextual overview of the scale and scope of urbanization in the developing world to explore the structural determinants of these processes. The political economy of urban-sector development is examined in order to elaborate the principal themes of the book.
The emergence of the new orthodoxy
During the last 15 to 20 years, the process of rapid urbanization in the developing world has entered a new and more dynamic phase. Underpinned by a number of structural factors, but largely propelled by the economic reform programme encompassing the related strategies of structural adjustment, market enablement and economic globalization, the impact of this new development agenda on the urban sector of the developing world has been profound. The outcome of the so-called neo-liberal orthodoxy has simultaneously accelerated the spatial and economic transformation of cities, intensified the incidence of poverty, and highlighted the incapacity of urban systems and land-use patterns to adapt to the scale of growth and spatial and social restructuring now taking place (Hamza and Zetter, 2000). The adverse performance of cities in terms of declining environmental quality, living conditions and public services, on the one hand, and increasing poverty, on the other, challenge the dominance of these economic imperatives, as we shall see later. Yet, they show little sign of relenting and it is pertinent to note that, despite these outcomes, UN-Habitat makes extensive use of the rhetoric of market enablement in its landmark report on Cities in a Globalizing World (UNCHS, 2001a).
Neo-liberal economic development strategies predicate the economic performance of cities over the competing arena of physical and social priorities enabled by a strong public sector. The latter dominated the preceding growth-with-equity development paradigm and its affordability–cost recovery–replicability implementation model of public-sector social investment: this was widely deployed in urban-sector shelter programmes for upgrading and sites and services, and associated urban infrastructure development. At the macro level, the limitations of urban-sector policies, framed within the growth-with-equity ideology, were symptomatic of the wider structural failure of developing economies, which were dramatically highlighted in the debt crisis of the 1980s. At the micro level, rapidly rising supply-side costs, notably in urban land, and also urban-sector production costs, severely limited the impact of shelter policies and programmes as the principal instrument with which to reduce high levels of urban poverty.
To understand these outcomes and their impact on the urban sector, we need to review the ascendancy and the main characteristics of the neo-liberal economic agenda. Whether responsibility for the economic crisis from the mid 1970s to the mid 1980s lies with the developing countries and the poor management of their domestic economies under a failing growth-with-equity paradigm, or whether it resulted from structural failings in the world economy, is arguable. However, the genesis of the transformation from managed economy to market economy lies in a combination of factors that contributed to the turmoil in the world economy during this period.
The oil crises of 1973–1974 and 1978–1979, combined with the growing magnitude of indebtedness mainly to cover the soaring costs of oil imports and public-sector spending, impacted most severely upon the countries of the developing world. In their public sectors, rising domestic budget deficits, escalating interest rates on development investment and inflation were paralleled by the flight of foreign investment capital, the sharp reduction in development lending by both bilateral and multilateral donors, rising external debt funded by corporate finance and a world trade recession, which adversely affected export prices for primary commodity producers. After the second oil crisis in 1978–1979, when the inability of many developing countries to honour their international financial obligations to both donors and commercial banks1 became critical, the World Bank and the International Monetary Fund (IMF) stepped in a second time. Again, these shocks, largely externally induced, had produced balance-of- payments crises, escalating fiscal deficits and the crumbling exchange values of already weak currencies. These conditions were particularly acute in the most indebted developing countries, though not necessarily the poorest – Mexico is the classic case. In effect, this unchallenged intervention in response to the global debt crisis and economic meltdown signalled the end of the mixed-economy development model and the orthodoxy of growth with equity, which had dominated development thinking and practice since the early 1960s. Leading the transformation to market enablement have been the World Bank and the IMF. Constituting, along with the US government, what has come to be called the ‘Washington consensus’, they have exercised a profound influence in elaborating the philosophy, the instruments and the institutionalization of the new paradigm of development.
In response to these unprecedented conditions and the potential economic collapse of many countries in the developing world, but primarily to tackle the wider potential impact of indebtedness and default on debt repayment, the World Bank and IMF provided heavily conditioned loan facilities through the imposition of structural adjustment and lending policies (SALs) (Stewart, 1995; Dasgupta, 1998; Mohan et al, 2000). Fundamentally a means to debt relief, SALs were predicated on an indebted recipient country adopting two interrelated portfolios of measures: an economic stabilization programme and restructuring of the national economy.
In the first place, the IMF obliged recipient countries to adopt short-term austerity programmes aimed at restoring macro-economic stability (and, thus, the capacity to repay development loans). The basis of the programmes was aggressive short-run demand and supply-side management, and fiscal and monetary reform typically including debt rescheduling to tackle the external borrowing crisis; reform of debt-servicing machinery to alleviate chronic balance-of-payments shortfalls; tax reform and severe reductions in public expenditure to overcome public-sector fiscal deficits; liberalizing international and domestic trade by removing foreign exchange controls (in effect, enforcing heavy devaluation through floating exchange rates); and other trade barriers such as protective tariffs and regulated prices of staple commodities (notably, basic foods). Punitive conditions applied if countries defaulted on the SAL terms.
Once the stabilization package was in place, structural adjustment then entered the reform stage, enacted by the World Bank. This aimed at longer-term restructuring of the economy and enhancing its productivity and competitiveness by reducing market distortions and mobilizing resources. Among the instruments to achieve this objective are productivity measures to increase efficiency; adopting structural measures to liberalize trade; privatizing state enterprises; and reconfiguring the roles of, and relationships between, private and public sectors in development and the provision of services. The next section discusses this framework more fully.
In practice, the short-term/long-term roles of the IMF and the World Bank, respectively, became blurred. The IMF became involved in structural lending, while the World Bank became more involved in negotiating short-term credit facilities. Other multilateral and bilateral donors also closely followed the World Bank and IMF market stabilization reform packages in their own lending programmes and policies.
Market enablement: Stage two
Destructive though their impact was, we can now see that by the late 1980s SAL policies were not an end in themselves, but a component in what was emerging as a much broader, though loosely coordinated, framework of concepts, policies and strategies to reformulate the structure of both national economies and their articulation into a radically new framework for the world economy. Arguably, the World Bank's structural reform programme was both the experiment for and the precursor of this second phase. It combined a domestic economic reform agenda in the first phase with a much bolder agenda to embrace the economies of the developing world within an international framework. Based on public choice theory of market behaviour, drawing on the seminal neo-liberal economic theorists such as Friedman (1963) and Hayek (1979), and driven by the major economies of the developed world, market enablement entered a second and more far-reaching stage of institutionalization: the apparatus of a fully developed market economy paradigm of development.
For the countries of the developing world, conditionality for loans and other assistance from the World Bank and other donors was based on the key instruments of market enablement: economic liberalization, privatization and governance reform.
On the one hand, this second generation of market enablement was an opportunistic reaction to the sudden collapse of the communist regimes. The elimination of a competing geo-strategic development ideology created a vacuum, which was rapidly filled by a ‘new world order’ dominated by market economy nations, who now had the monopoly in the discourse on development concepts and practice. In this new milieu, globalization (trade liberalization, open economies, free movement of capital, abetting the expansion of transnational corporations, or TNCs) has been deployed, at a macro level to stimulate economic growth and development. These tools replicate, reinforce and expand the earlier framework of the World Bank's structural reform packages.
On the other hand, a number of structural variables were also instrumental in enabling the transformation to this new transnational phase of world economic development (Castells, 1996; Burgess et al, 1997; Hardt and Negri, 2000). Thus, alongside SALs, three key variables underpin the implementation of market enablement, which have impacted upon developing countries and their urban sectors with particular force.
First, there is the drive to privatization involving policies to: reduce state intervention in the development process; dispense with equity-based and redistributional strategies; and deregulate state controls over development. The last initiative is particularly critical in the context of this book through the privatization of public enterprises and urban service providers, the promotion of private-sector delivery of housing, the removal of public subsidies, and the reduction in powers to regulate and manage urban spatial development.
Paralleling the diminution of state intervention has been the governance and institutional reform package. Conceptually and in practice, this package buttresses the economic imperatives inherent in both market enablement and globalization (discussed below). Governance reform replaces the ‘public service and provision’ model, embedded in the growth-with-equity paradigm, with communitarian and stakeholder models of democratic decision-making. The structural purpose is to manage diversity by atomizing it and then integrating it within a consensus on the irreducibility of global capitalism (Hardt and Negri, 2000). Government decentralization and the development of a stakeholder model of local democratic control are the principal instruments for this reform, and they are discussed in more detail in the section on ‘Market enablement: The role of cities and impacts upon the urban sector’. These two public-sector administrative reform strategies, together with tax and structural reforms, are designed to encourage productive efficiency, and private and foreign investment, and thus to boost market-led economic growth.
The third variable is aid conditionality and the strategic targeting of bilateral aid agreements. These initiatives have been deployed by the donor community of the ‘North’ as the main instruments and levers to mediate – or enforce compliance with – market enablement, governance reform and deregulation.
The neo-liberal agenda now dominates the discourse of global capitalism. It has promoted not only a new set of economic relationships between states, but, perhaps more importantly for this book, a new set of relationships between the market forces of international capital, the state, society and the political and institutional arrangements mediating this interaction in the cities of the developing world. Because the urban arena provides the dynamic for economic development and change, and because this is where production and consumption are concentrated, it is the urban sector that must be fully articulated into the world economy if the neo-liberal agenda is to be sustained. Thus, from the urban perspective of this book, we can see how, early on, cities and the urban sector became the focus for embedding the new development paradigm. It is no coincidence that the inception of the second stage of the paradigm was demarcated by publication of the World Bank report Urban Policy and Economic Development (World Bank, 1991), closely followed by the more sector-specific Enabling Housing Markets to Work (World Bank, 1993). These reports laid out the credo of the World Bank and clearly established the significance of the urban sector as the motor force for, and main target of, market enablement strategies.
Refinements to the neo-liberal development paradigm took place as it evolved during this second stage. Perhaps to mitigate both the increasingly severe impacts of SAL programmes and market enablement policies on the developing world economies, as well as the growing social unrest evident in their cities (discussed below), the World Bank and IMF have twice shifted the emphasis, but not the overall ideological rationale or the apparatus of the new paradigm. During the late 1980s, the call for ‘adjustment with a human face’ (Cornia et al, 1988) highlighted the negative social impacts and the declining living standards that structural adjustment policies were producing, especially for the most vulnerable. Apart from the increasing incidence of poverty, which differentially affected the poorest, the evidence pointed to the damaging short- and long-term socio-economic effects – for example, through rising levels of malnutrition as a result of withdrawal of food subsidies; declining public transfers to households in terms of expenditure on social care, which was bringing about the withdrawal of children from education; and the declining affordability of healthcare. These costs could not be discounted from the short-term economic stabilization equation (Kakwani, 1995; Killick, 1995). As a result, the World Bank and IMF started to consider the equity issues raised by adjustment through the introduction of social safety nets in countries such as Ghana, followed by similar social action and recovery programmes in other least developed countries, such as Uganda, Malawi and Zambia, in order to mitigate the social costs of adjustment. But these were largely pragmatic responses to a much wider systemic problem.
The failure of these early compensatory policies to alleviate the negative social costs of adjustment became evident in the intensifying impact of market enablement strategies on poor households. Adapting rural-sector concepts to the urban sector, research on livelihood security and assets-based management strategies highlighted the way in which massive numbers of impoverished households in the cities of the developing world were struggling to cope with their increasing economic vulnerability and powerlessness in the face of macro-economic reform (Sanderson, 2002). The experiences provided the impetus for a new policy initiative that was intended to be more strategic in approach and more targeted in intervention. In 1999, the World Bank and IMF introduced the concept of Poverty Reduction Strategy Papers (PRSPs). Their aim is to link debt-relief programmes, for highly indebted poor countries (approximately 40, in total), to specifically targeted measures designed to reduce the incidence of poverty experienced by the poorest people and those directly impoverished by adjustment programmes (IMF, 1999; McGee, 2000). The intention is that PSRPs should identify public action priorities that will impact most on reducing the prevalence of poverty.
Arguably, the increasing poverty which PSRPs are designed to tackle is precisely the outcome of SALs and the wider reform programmes in the first place. Poverty has increased because of the following:
- Public-sector goods and services have contracted when the demand for social transfers caused by SAL programmes has increased.
- Accelerating unemployment is caused by restructuring the urban labour market, which leads to declining resources to buy into the growth-based strategy of market enablement.
These negative impacts, and the growing impoverishment of urban populations, are compounded by the time lag between the introduction of stabilization and adjustment programmes and the potential benefits that restructured economies should deliver. For many sub-Saharan countries, exports as a percentage of GDP are still falling: debt servicing has been substituted for debt relief, eroding the revenue base. As a result, basic goods and services are unaffordable to consumers and public-sector suppliers.
PRSPs are project-based and social-policy oriented. Project interventions aim to harmonize social service delivery with income and employment generation. Typically, this might include, for example, environmental and waste collection improvements, water and sanitation schemes, and improvements to food security for the most vulnerable households. The policy dimension aims at research, public education and awareness-raising initiatives for low-income households related to poverty alleviation, health and sanitation. Problems of implementation – under-funding; short time horizons; poor targeting of vulnerable groups; centralization rather than ‘community ownership’; limited dissemination of information; inadequate monitoring; and limited sustainability – have been endemic in these poverty alleviation measures.
Significantly and ironically, PRSPs further bind developing countries into the web of external domination under the guise of liberalization and open economies. Thus, as with SALs, conditionality is attached to PRSPs. PRSPs have to be prepared prior to obtaining debt relief: goals and strategies have to be established and countries have to indicate progress before funds are released. In addition, PRSPs are used as an instrument to implement another part of the structural reform agenda – governance reform. Governments must prepare PRSPs using participatory processes and stakeholder partnership with the emerging agencies of civil society to design, manage and implement poverty reduction programmes. Indeed, the PRSPs must contain, inter alia, not just projects and actions, but institutional reform programmes as well. The argument here is not with the modalities of PRSPs – problematic though they are – but with the conditionality of the process.
Again, like the core strategy of structural reform, the PRSP initiative has also been promulgated and adopted across the donor community: for example, the UK Department for International Development (DFID), has recently adopted a poverty reduction agenda as a key criterion in its international development strategy.
The international and interdependent characteristics of market enablement policies manifest themselves in the growing competitive interaction between forces of supply and demand, production, and investment on a global stage. Globalization, a process of integrating national and local economies within an international framework, marks a new and dynamic stage in the development of the world's economy. It is a powerful manifestation of the new world order (Hoogvelt, 1997). Its apparatus embeds the global sovereignty of capitalism, or empire – in Hardt and Negri's – terminology through different moments of incorporation2 (Hardt and Negri, 2000), such that globalization and market enablement are co-existing and interdependent processes.
Despite the tendency for ‘neo-liberal convergence’, globalization, like market enablement, is not, of course, a homogenous process in time or space; therefore, different theoretical positions have been articulated concerning the impacts of globalization on national policies and institutions. Nordhaug (2002) reviews the contested theoretical and empirical evidence that revolves around the extent to which the national political and economic institutions mediate and condition transnational forces.3
While theoretical consensus is lacking regarding the processes and determinants of globalization, there is broad agreement on some of the main characteristics; this permits us to draw some conclusions about the consequences for, and impacts on, the urban sector. By using their comparative advantages to increase their participation in international trade, the integration of developing countries within a globalizing economy is promoted as both the salvation for their currently failing economies and the route to future prosperity. Despite the mounting evidence that the benefits of globalization are unevenly distributed, a number of strategies have been advocated for countries undergoing structural adjustment in the developing world in order to enhance their global presence. Besides being urged to adopt these policy initiatives, developing countries have been obliged and encouraged to make available an attractive environment for foreign direct investment (FDI), including multinational enterprises, and have been required to liberalize protective trade barriers. The aim is to increase the mobility of factors of production which, theoretically at least, should favour the developing world. Pressure from the World Trade Organization (WTO), despite failure in Cancun in 2003 to accomplish another major stage in opening international trade, has been instrumental in this process. And where these approaches meet increasing resistance, bilateral trade and aid agreements, invariably favouring the donor country, break down the unanimity of the developing countries. Increasingly, we see the pattern of developed countries either individually, or through intergovernmental institutions such as the EC, invoking unilateral protective pricing/subsidies for their domestic producers, which ironically discriminate against cheaper producers in the developing world. Alongside these open-door policies, the reduction in state regulation of development is required – for example, through urban planning and environmental controls. Privatization of public services is another strategy, which mainly favours international corporate investment that is often in harmony with World Bank structural reform programmes.
These outcomes prise open the economies of the developing world, seeking to integrate them within a globalized economy, but on largely unfavourable terms Market Enablement and the that diminish the autonomy and instrumentality which governments had, in the past, to manage and direct their development strategies. Cities in the developing world play a key role in a globalizing world, mediating the processes of economic globalization, on the one hand, and domestic human and economic development, on the other. Their unique qualities and resources provide competitive advantages, enabling them to act both as engines of economic growth and agents of social change – as discussed earlier in this chapter. At the same time, the process of globalization provides major challenges to the spatial, social and economic structure of cities, ‘forcing them to act as protagonists in the international arena’ (Brand, 2002, p86; Hamza and Zetter, 2000), while calling into question their sustainability as environmental conditions continue to deteriorate (Zetter, 2002; Zetter and Moataz Hassan, 2002a). These contradictory outcomes are discussed in more detail below.
Castells (1996) points to the reinforcing apparatus of this globalized, neo-liberal economic model. He identifies, first, how globalization resonates with the extraordinary growth in communications and exchange networks: this facilitates the international flow of goods, services, capital and, to a lesser extent, labour. Simultaneously, this also shifts sovereignty and power from the nation state to unaccountable transnational corporations (TNCs) who have become hugely instrumental in structuring urban economic and spatial change, notably in the developing world where the competitive advantages of cheap labour and low or ineffectual regulation are especially conducive attractions to FDI by TNCs. Second, Castells observes the asymmetrical power relations between the developed and the developing world. These demand that developing countries either accept stringent and highly disadvantageous membership rules – SAL, market deregulation, open economies and access for FDI, reduction in state management of development, and so on – or run the risk of marginalization, perhaps total exclusion altogether, for the weakest economies (for example, in Africa) from the new world order.
MARKET ENABLEMENT: THE ROLE OF CITIES
AND IMPACTS UPON THE URBAN SECTOR
As we have seen, evidence increasingly points to the negative socio-economic (Mohan et al, 2000) and environmental impacts (see, for example, Reed 1992; Richardson 1996; ODI, 1996) of SAL programmes and the market enablement regime on developing countries. The stringent conditions are manifest in: high social costs caused by reduced budget allocations for health and education; rising prices for basic foodstuffs as subsidies are abolished; the re-pricing of public services such as water and transport; and the demise of equity-based policy-making. Given the very limited success of market enablement policies in achieving their objectives to date, the benefits of economic stability seem to be offset by the costs of increasing political instability. Significantly, these protests at the impact of SALs and market enablement policies are urban based – for example, the water wars in Bolivia (Crespo Flores, 2002) and the food riots in Morocco, Zambia, Indonesia and Ecuador (Mohan et al, 2000) – hence, the introduction of mitigating policies for poverty alleviation.
More specifically, then, what does this development paradigm mean for the urban sector in the developing world? What are the impacts on cities and their spatial and social structures? The chapters in this book explore these questions in detail. Here, the intention is to provide a more general overview, while recognizing that there are widely differing impacts between and within cities of the developing world. To the extent that market enablement favours the developing world, not all cities – or, indeed, countries – have benefited from increasing integration within a global economy, notably in sub-Saharan Africa. The differential impact on households and classes within the countries and cities of the developing world is a key theme of current policy-making and research (UNCHS, 2001a, 2001b).
The role of cities and the new urban agenda
In 1991, the World Bank set out the pivotal role for cities in its now landmark policy statement. This encapsulated and gave substance to the shift in urban-sector policy-making under conditions of market enablement. Rejecting the large-scale public-sector role and the project-driven model of the earlier era, the strategy favoured ‘urban operations on city-wide reform, institutional development and high priority investments, and puts development assistance in the urban sector in the context of broader objectives of economic development and macro-economic performance’ (World Bank, 1991, p4, emphasis added). In short, from the 1990s onwards, the urban agenda has been the market enablement agenda. This reconfiguration recognizes that cities are a fundamental instrument for delivering the macro-economic objectives of globalization and market enablement. With their comparative advantages and their potential for export-led growth, cities in the developing world are both a crucial development resource and the leading sector in these processes, as elaborated in the discussion on the dynamics of cities earlier in this chapter. The market enablement agenda has, therefore, been pursued with particular vigour in the urban arena.
Just as the overall objectives of market enablement have been to increase the productivity and competitiveness of national economies, of paramount importance to the delivery of this agenda has been the objective of increasing urban productivity in order for developing world cities to better access the transnational global economy, while reducing their costs of production, which are mainly attributed to high social overheads. In other words, cities provide the contested territory between the social welfare function of public-sector investment and management, on the one hand, and public choice theory and private-sector productivity objectives, on the other.
However, macro-economic imperatives were not the only justification for reforming the urban sector. This argument was buttressed by asserting the ‘failure of the state’, on the one hand, and the emerging debates on urban governance, on the other. Thus, by 1997, taking the issue of the state in a changing world as the theme for its annual review (but missing the irony of its position), the World Bank asserted the reasons for the crisis in statehood: declining state capability and credibility in the eyes of its citizens (World Bank, 1997). Without acknowledging the extent to which macro-economic reform might have orchestrated ‘this institutional vacuum of significant proportions’ (World Bank, 1997, p162), the review re-endorsed its already well-established but simplistic prescriptions for redefining the role and functioning of the state within a ‘governance and management’ agenda. In radically reshaping the role and development of cities, market enablement provides the economic instrumentality for implementing public choice theory, while reform of urban governance provides the institutional instrumentality necessary for its implementation.
Whether consciously or not, this neo-liberal orthodoxy borrows from North's holistic theory of institutional economics (North, 1986) because it is the joint package of macro-economic and governance reform that is so significant to what is happening in the urban arena. Defending the inherent contradictions in their position here, neo-classicists accept intervention strictly on the condition that it will correct market failures. Thus, as the main indicator of failing urban governance and the urban sector's poor performance, the low productivity of cities was attributed to supply-side blockages and market distortions, largely blamed on the long reach of an inflated public sector and the rigidity of the regulatory instruments of urban administrations. By asserting that these factors inhibited the private sector as the engine of market enablement at the urban level, such an assessment, of course, replicated the macro-economic analysis at the national level. Among the evidence cited for these conditions was: failing or inefficient infrastructure systems and urban services; inadequate land supply and development practices, creating uncertainty and inhibiting both commercial and residential investment; regulatory machinery constraining private investment and FDI, especially in export-oriented production; a burden of local taxation that fell heavily on the formal productive sector; and inadequate housing investment. While some of these failings contributed to low labour productivity – for example, poor housing and urban transport – others impacted more directly upon private-sector investment and productivity – for example, through tax burdens, costs of regulation and distribution costs.
Managing cities under conditions of market enablement
The perceived challenge, then, was to remove these constraints and unlock the urban sector's investment potential and opportunities. In order for cities to deliver the market enablement paradigm, the apparatus of city development and management has been radically reconceived over the last decade. Two interrelated aspects are considered here: the modes and tools of intervention and management; and the modes of governance, including the agencies and institutional structures for administering, managing and developing cities. The unifying characteristic, consonant with the neo-liberal agenda and public choice theory, is the progressive disaggregation of the powers, resources and capabilities found in the orthodox Weberian model of public-sector urban administration, and their replacement by a more diffuse, pluralistic and, ultimately, less accountable model. In restructuring the relations between the state and society, two concurrent strategies have been deployed to transform the approaches to city development and management. First, the World Bank's global urban management programme (see, for example, Davey, 1994; World Bank, 2000), provided a framework of initiatives that was embarked upon during the early 1990s, alongside its urban policy agenda. Second, this framework was elaborated and promulgated through lending and adjustment policies, where conditionality increasingly drove the urban-sector reform programme.
Thus, both the components of the urban-sector reform programme and the instrumental way in which these reforms have been enacted are remarkably consistent with the characteristics of the structural economic reforms at the national level. The extent to which these reforms signal the demise of the Weberian model of public-sector bureaucracies as the global model of urban governance and administration remains to be seen.
In terms of the modes of intervention, urban government is increasingly cast in the role as an ‘enabler’ and decreasingly in the role as the supplier or regulator of public goods, such as land and housing, services and infrastructure. Indeed, one of the basic characteristics of the neo-liberal state is to separate policy-making from implementation, and to isolate the production and provision of urban public services from public control. Although it is being dismantled, the conventional city government public-sector role is unlikely to diminish entirely. However, the emerging function of urban administrations is to act as an agent for the city as a productive and utility-maximizing economic asset. The contrast between the city as a business and the city as a social entity in which its urban institutions respond to the needs of its citizens could not be more striking.
This transformation has far-reaching practical implications for tackling the complex dynamics of urban growth and the spatial structure of cities in the developing world. Privatization separates the production and provision of key urban services, such as land and water supply, from the wider institutional, spatial and social policy framework. This loosens the already limited regulatory capacity of urban governments to: direct the overall spatial strategy of city-building; phase and coordinate development; and implement equity-based urban development policies. By restraining the direct modes of intervention, market enablement displaces the capacity of urban administrations to tackle not only this traditional agenda, but also the highly regressive social, environmental and economic patterns of urbanization generated by the dynamics of market-led city growth.
Privatizing urban infrastructure separates the agencies responsible for making urban policy and those implementing urban development: this might be termed the ‘sectoral transformation’ of urban policy and development. By exposing the contradiction between a service provision concept of public goods and short-run ‘productivity’ indicators such as profit maximization, privatization empowers the interests and objectives of private providers – for example, by deregulating user charges – over the wider interests of public agencies to coordinate and manage urban growth.
Furthermore, reconceptualizing the modes of intervention and service provision as market-led priorities diminishes the significance of the wider agenda of how cities are managed and developed, and favours more narrowly conceived objectives of profitability and productivity. This marginalizes poor households in terms of the access and affordability of vital urban commodities such as housing, land and water supply. These are critical urban policy issues in most cities of the developing world. Conversely, the enablement mode of intervention stresses the dominance of market-priced public services and user charges, which satisfy the primary objectives of profit-maximizing corporate investors. These outcomes radically reposition the function and purpose of urban policy-making. A declining emphasis on regulating the production of the physical environment in order to mediate competing demands within a spatial strategy is increasingly substituted by a public-sector role whose primary task is limited to coordinating urban development processes in order to enhance urban productivity and efficiency in the interests of the powerful city-building stakeholders. At the same time, this model of urban management becomes less able to challenge the regressive spatial and social effects of globalization (Burgess et al, 1997; Brand, 2002).
The argument here is not to resurrect largely discredited control models of city planning. Rather, it is to make the point that the neo-liberal agenda promotes an ‘a-spatial’ concept of city building and commensurately reduces the capacity to mediate city-building processes and spatial structures within a wider conceptualization of the public interest. It is increasingly difficult to find where these still-valid and vital objectives of urban public policy fit into the new apparatus.
The modes of governance of cities – developing civil society, in the current idiom – is the second area where the paradigm of market enablement has determined a reconceptualization of how cities should be administered, managed and developed. Two complementary processes are evident in what might be characterized as a shift from government to governance: restructuring the machinery and role of local government, and decentralization.
As noted above, in much of the developing world a significant proportion of city-building has always been informal and community based, taking place without the formal structures of the urban government or the market. However, under conditions of market enablement, the concept of autonomy and diversity of decision-makers is legitimized as the new form of governance.4 Directly ‘enabling’ popular and community-based social movements and enhancing the role of non-governmental organizations (NGOs) (Abbot, 1996; Fowler and Edwards, 2002) and other stakeholders has introduced a radically new framework of agencies and institutions responsible for urban governance. Conceptualized in this way, these stakeholders no longer constitute the object of policy-making and intervention by urban administrations, but are partners in complex networks of interests that are ‘negotiating’ (Abbot, 1996) the processes of city-building. Thus, the traditional role of the public sector, predicated on a monopolistic view of urban governments as strategists, regulators and providers, is replaced by a pluralistic model of urban policy-making, development and management. While direct accountability may be reduced, conversely, enablement is a vehicle with which stakeholders, such as NGOs and communities, can take firmer control and responsibility for the way in which their environments develop and their urban needs are satisfied. To the extent that many interest groups were marginalized in the past, governance reform appears to offers a more inclusive structure of urban government and decision-making. Localizing development empowers communities and potentially mobilizes previously untapped resources. Governance reform also resonates with the wider rights-based discourse that surrounds development debates.
But concepts of community and the concept of governance as enablement and empowerment are inherently problematic (Jenkins, 2001). In this new and disaggregated form of organizing urban administration and development, representative citizen democracy is replaced by modes of governance enacted through networks of semi-public, joint-venture, private corporate and community bodies. Rather than through large, locally elected and accountable local authorities, city-building is undertaken by different communities and interest groups with different perspectives on the processes, resources and capacities that can influence outcomes. Strategies for urban development and the modalities of decision-making tend to be fragmented, rather than coordinated. It might be concluded that new modes of governance have redefined agencies and communities as collectives of consumers bargaining in the urban marketplace of public goods and services.
The outcome, as Hoogvelt (1997), among others, argues, is not necessarily that paternalistic and ‘clientelist’ models of government are removed – rather, that they are reformed and institutionalized within a new framework of diffuse stakeholders who have limited accountability to the urban poor and with whom the urban poor have little bargaining power. It remains to be seen whether institutionalizing the innovative energies of low-income communities within new frameworks of governance simply co-opts and neutralizes their capacity, leaving them as powerless as in the past. Empowerment introduces an uneasy tension between business and social entities in how the city should be developed, serviced and managed, and there is persuasive evidence that poor urban communities are being impoverished rather than empowered by these reforms. Indeed, by documenting the apparent failure of the ‘new governance’ model to deliver more effective and accountable services that address the needs of low-income dwellers, UN-Habitat is now claiming that a policy vacuum has developed because government agencies have no access to these slum areas (UNCHS, 2003). As a result, the economic, environmental and social conditions of the mass of urban dwellers in the developing world are deteriorating. These damaging outcomes contradict, of course, expectations. Not only are they a poignant reflection on the irreversible diminution of the public-sector role in urban development, but also an ironic comment on UN-Habitat's own endorsement of the governance agenda at Habitat II in Istanbul in 1996. By highlighting this evidence, UN-Habitat now appears to be breaking ranks with the market enablement/governance reform paradigm.
The second component of governance reform has been decentralization – the intended redistribution of financial resources, administrative capacity and revenue-raising powers from central to local urban governments. Decentralization has been the counterpart to both the restructuring of local government and the wider agenda of enhancing urban productivity and competitiveness. Decentralization has been promoted as the means by which local management can be enhanced through building representative and democratically accountable structures closer to the point of decision-making on urban services and strategies.
Superficially, the case for decentralization is plausible, and in these terms it is clearly a central plank in governance reform; but its execution is proving to be a rather more intractable part of the governance and economic enablement agenda.
First, decentralization potentially makes far more challenging the already difficult task of designing, implementing and coordinating national and regional settlement strategies and urban development programmes. There are implications for establishing the coherent spatial distribution of economic development if cities are more autonomous and aggressive in their growth plans. Urban productivity objectives could be impaired if, for example, inter- and intra-regional infrastructure is poorly coordinated with more independently developed cities. Within cities, decentralization may benefit individual communities, enabling them to achieve definable gains in their physical and social surroundings. But Brand in Colombia (2002) and de la Macorra in Mexico (1999), for example, illustrate how local innovation also heightens the organized competition for scarce urban resources, and accentuates the disaggregation of decision-making, resource allocation and service delivery. These outcomes militate against strategic urban planning processes and the strategic provision of urban services. In these examples, decentralization accomplishes micro-level empowerment at the expense of reduced efficacy of macro-level urban strategy.
Next, shifting the balance between central state and local control is predicated on capacity-building, which the World Bank has promoted in its urban management programme. But, if previous governmental models were hopelessly over-optimistic about the powers and capacities of urban administrations, decentralization of powers to manage the complex processes of rapid urban growth under the current reform package has been equally retarded by the lack of institutional capacity and appropriate regulatory instruments and machinery at the local level. Notable shortfalls are in the capacity to manage the urban development process and to provide an effective fiscal base for cities to manage themselves in any more autonomous or accountable ways. Negotiating innovative financial packages and partnerships to manage land and housing development, or working within a contract and compliance framework of service delivery, requires new professional skills and experience that are in short supply, especially where municipalities only had responsibility for a limited range of functions in the past.
These outcomes are creating a vacuum that is being filled by both old and new coalitions of urban interests who are assuming power for the future city at a local level. Elite groups appropriate and consolidate power, as they always have, through formal and informal structures at the urban level, exemplified in countries as wide apart as Egypt (Zetter and Hamza, 1998; Dorman, 2002), Colombia (Brand, 2002; see also Chapter 8 in this volume), Guatemala (Grant, 2002) and Brazil (see Chapter 6 in this volume; Lima, 2002). These interests are benefiting from twin opportunities provided by macro-economic reform policies and the decentralization/deregulation of development and service provision at the micro level. These processes enable powerful coalitions to reinforce their interests and legitimize their control by investing in potentially lucrative privatized urban services. At the same time, decentralization is creating essentially weak and under-resourced public administrations that are less empowered to manage change in an environment of competing stakeholders and privatized infrastructure.
As concentrations of development and power, ironically, cities in the developing world are perhaps most prone to the adverse impacts of this agenda of market and governance enablement. The combined pressures of urbanization, structural reform packages and economic globalization are contributing to a decline in living and environmental standards, and are pushing cities in the developing world into a new era of social and economic turbulence. Urban dwellers, and particularly the urban poor, have been adversely affected by the results of market enablement: increasing prices of basic commodities such as food and access to land; declining real incomes; rising unemployment in the formal sector, notably from privatization and the retrenchment of public administration; reduction in public expenditure and investment; and declining affordability of privatized public goods and basic services such as water, electricity, transport and waste disposal. In the developing world, especially in Latin America, there is now widespread evidence of a correlation between indicators such as increasing poverty levels, decreasing real wages and declining share of national income by the poorest quartiles and periods of economic recession and the introduction of SALs (Oxfam, 1995; Tulchin and Garland, 2000).
As Rakodi argues, the results of adjustment and enablement policies have, at best, been slow to manifest themselves; at worst, the incidence of urban poverty remains unacceptably high and, in some countries, continues to rise (Rakodi, 2002). For example, during the five-year period from 1993 to 1998, the incidence of poverty in Nairobi has risen from 20.8 per cent to 30 per cent of households living in absolute poverty, while in Lomé the increase is from 12 per cent to 25 per cent (UNCHS, 2000); these data appear to be typical. More generally, levels of poverty have only recently regained the levels that existed during the 1980s. The number of people living in absolute poverty is rising and could double in the next 15 years (World Bank, 1999), while the annual UNDP reports show that a substantial number of the already poor countries are getting poorer on a ‘rolling decade’ basis. It is neither coincidental that urban social movements have been at the forefront in resisting reform policies, as noted above, nor surprising that the design of poverty alleviation measures, such as PRSPs, have been mainly aimed at urban dwellers whose households’ consumption and expenditure patterns have been hardest hit by the economic reform programmes.
The expanding presence of the marginalized ‘informal city’ in the developing world – notably represented by the informal nature of the shelter and employment sectors – provides the most obvious evidence of the negative outcomes of neo-liberal policies. With regard to the restructuring of the urban labour market, privatizing the provision of public goods and the retrenchment of urban government and parastatal agencies has directly contributed to formal-sector unemployment. Conversely, because formal-sector employment growth in the private sector has been so slow, it has not been able to absorb redundant workers from the public sector or the natural expansion of the labour force – typically, labour force growth rates in many developing countries expand at more than twice the rate of employment creation in the formal sector. By driving down the capacity of the wage economy to sustain the livelihoods of the majority of urban dwellers and by driving up the price of public goods, such as water, and welfare services, health and education,5 it is hardly surprising that SAL policies force poor city dwellers – including redundant or poorly paid middle-class, public-sector employees – to turn to the informal sector of the urban economy. Informal sector growth rates of 10 per cent per annum in countries such as Kenya are probably not untypical (Republic of Kenya, 2000). Paradoxically, given the intention of market enablement policies to enhance urban productivity, the outcome of this hostile economic climate has been to enlarge the informal sector, where productivity rates are very uneven.
With regard to the shelter sector, market enablement policies offer no alternative beyond the profit-maximizing strategies of providers. The approach is predicated on a housing market model that is neither affordable, because formal-sector provision pushes up the price of land and services, nor necessarily the choice of the majority of the urban poor for whom other related housing needs, such as security of tenure, might be provided as a perceived rather than open market commodity. Running counter to the intended objectives of market enablement, perhaps the predicted expansion of the informal city, as the predominant form of urbanization in the developing world (Fernandes and Varley, 1997; UNCHS, 2003), is ironically not so much a failure of market enablement but the rational process of people exercising choice in the urban marketplace.
As these two sectors illustrate, urban populations are highly vulnerable to the impacts of market enablement. Because their levels and the patterns of expenditure are complex, rising prices, inflation and declining incomes caused by rising unemployment make urban populations much more susceptible to price shocks introduced by market enablement policies. Moreover, at least in the short term, open market prices and declining wages render many basic urban services unaffordable just when the demand for social transfers is rising. The introduction of PRSPs as a safety valve indicates that the accelerating levels of urban poverty are a very problematic outcome of the new paradigm. There is evident potential for an increase in the social and economic turbulence so far witnessed in a few cities. Paradoxically, the concept of the state embodied in market enablement has displaced the welfare aspirations of the growth-with-equity paradigm precisely at a time when greater public intervention and social transfers are demanded to remedy the regressive and unequal patterns of urban development that it has caused (Hamza and Zetter, 2000).
At the same time for the urban economy as a whole, these outcomes introduce demand- and supply-side constraints that potentially hamper the drive to increase urban productivity, competitiveness and export-led growth. Reduced purchasing power, caused by open market and competitive (that is, low) wage rates, suppresses demand. Simultaneously, where there is a potential market for locally manufactured goods, short-term supply-side constraints in a liberalized economy – for example, poor labour productivity caused by inadequate education, unhealthy living conditions and bad transport – merely accelerate a growth in imports and a worsening balance-of-payments deficit.
Governance reform by shifting power for the management and development of cities towards diverse groups of stakeholders increasingly highlights the tensions between economic productivity and environmental sustainability. The dilemma for urban authorities is to produce spatial strategies and regulatory frameworks that consolidate the comparative advantages of their cities, yet defend the entitlements of low-income urban poor to reasonable housing, improved access to urban services and reduced environmental degradation. The shift from centralized, state-led regulatory planning frameworks to a more flexible, market-oriented model also shifts the balance towards developing cities which are neither economically sustainable nor environmentally sustainable.
The prolonged economic crisis in the developing world, as much because of, rather than despite, the aspirations of market enablement, continues to have dramatic impacts on the cities of the developing world in terms of the widespread incidence of poverty, escalating growth of informal settlements (UNCHS, 2003), growing inequality, and declining environmental and living standards. These outcomes are paralleled by the commensurate decline in the capability of public institutions to negotiate and mediate conflicting interests in the urban arena. For most, if not all, developing countries, the ambition now is not so much to build entrepreneurial cities connected to the global economy; rather, what is at stake is the basic survival of the cities in an era of declining social, economic and environmental conditions and the legitimacy of government to protect the needs and livelihoods of its citizens.
Given these pessimistic conditions, it could be argued that the impact of market enablement and new modes of urban governance have accentuated rather than diminished the demand for public control at the same time as the power of the urban governments has withered (Zetter, 2002). The Weberian model of administrative structure and accountability is not the only model called into question by market enablement and new conceptions of urban governance. Arguably, the decline in state legitimacy at the urban level (in the context of this book), brings with it the decline in the Hobbesian social contract between government and the governed. It remains an open question whether the enablement reform agenda, with its combined strategies for urban governance and macro-economic performance, will be sufficiently resilient and progressive to manage both the increasing economic and social instability of cities in the developing world and their growing unsustainability in environmental and spatial terms.
The book, then, explores the interplay between market enablement and policy outcomes in the urban sector, and the often disjunctive relationship between policy expectations and their impacts.
Chapters 2 to 4 – Cedric Pugh on the relationship between welfare and development, Mohamed Hamza on the relationships between the state and foreign aid in development, and Carole Rakodi on poverty alleviation and development – develop the discourse of market enablement by addressing how these three structural issues have reformulated the political economy of development. The chapters discuss how these structural changes in development theory and practice have redefined the role of the state vis-à-vis the urban sector and the urban policy-making process. They demonstrate that although these structural changes are often assumed to be both necessary and unproblematic, they challenge the neo-liberal conceptualization of development and produce unintended and disjunctive outcomes.
Chapters 5 to 8 focus on key urban-sector policy areas of land, development and housing, drawing their evidence from country-specific studies – Gareth Jones mainly on Mexico, Geoffrey Payne and Richard Grover on the so-called ‘transitional economies’, Flávio de Souza and Zetter on Brazil and Andrés Ortiz-Gómez and Zetter on Colombia. Adding to the case study approach of Hamza on Egypt and Rakodi on Kenya, the objective here is twofold. Through an exploration of specific operational contexts, these case studies both elaborate upon and provide significant insights into the theoretical discourse surrounding the enablement development paradigm played out in the developing world. Then, from this applied perspective, the case studies demonstrate the inherently contradictory tensions between urban policy and outcomes within the enablement paradigm. They argue that key objectives embodied in enablement, such as urban productivity, land delivery for low-income dwellers, housing programmes, poverty alleviation, improvements in living standards and participatory development strategies, are rarely delivered. These analyses highlight the distinctiveness of individual countries’ responses to the market enablement paradigm, providing a counterbalance to what often appears as a relentlessly homogenous set of conditions.
Chapter 2, by the late Cedric Pugh, is a wide-ranging discourse on the shifting philosophical and conceptual core of the development debate around the themes of welfare and political economy, an explanation of the succession of these ideas, and an evaluation of their significance in the context of housing policy. It offers a fittingly broad canvas not only to the themes of the book, but also as an epitaph to Pugh's own prodigious and penetrating critique of urban policy-making over several decades.
Pugh's thesis in this chapter has two pillars that bear directly on the themes of the book. First, taking as his starting point Sen's reasoning that development is about promoting capabilities, choices and freedom (Sen, 1985; Drèze and Sen, 1995), Pugh develops a conceptualization of (housing) welfare that is value-based rather than more narrowly focused on material standards such as poverty alleviation or basic needs, or urban productivity. From this wider philosophical perspective, and in an often dialectical discussion, Pugh's argument is that while it may often be assumed that unified links bind together ideological precepts, theoretical and actual policies, and welfare, this is scarcely ever true either in principle or in practice. Second, he argues that a monopolistic ideological position is both philosophically and socially self-limiting since all three competing ideologies – in simple terms caricatured as the market, the state and householders – can produce inequality as much as enhancing opportunity and equity.
His analysis thus occupies the ‘middle ground’ of the book: he would probably have contested the firmly ‘rejectionist’ stance against the neo-liberal project that I have used in this introduction, while similarly pointing out the often regressive outcomes of growth with equity. But his thesis is not secular or ideologically neutral. Pugh's thesis strongly resonates with the theoretical (or ideological) propositions of structuration articulated by Giddens (1998) over the last decade, and its application in the so-called ‘third way’ of current British political practice.
Relating his thesis to housing, this is, of course, a developmental sector that pre-eminently challenges us to think critically about the discourse on development concepts and policies. Housing welfare is more than about material conditions or maximizing productivity: it gives way to wider philosophical and moral obligations of widening social and economic opportunities, and the generation of wealth, human capital and capabilities. At the same time, the rapidity of socio-economic and institutional change in the urban arena, the urban reform programme of market enablement and the forces of globalization have profound impacts on the housing sector.
Deploying his thesis to investigate the political economy of housing policy, Pugh considers two concepts that dominate policy: the welfare function of housing and alleviating housing inequality. These constitute, perhaps, the most contested areas of theory and policy, nowhere more so than in the developing world. Pugh's central purpose is to reconcile the competing ideological positions taken on these two contested variables. Providing both theoretical argument and empirical evidence, he advances a general thesis in which the ideologies of the market, state and householder can co-exist in expanding social and economic opportunities. Comparative evaluation demonstrates that those countries which have most successfully developed their housing sectors are those where state, market and household (self-help) ideologies have been unconventionally combined. Despite their ideological diversity, Singapore and Chile are cited as examples of this thesis. Thus, while acknowledging that the housing sector is, indeed, contested territory in theory and in policy, a persistent theme of Chapter 2 is to caution against partisan ideologies and to seek what Pugh calls a ‘blended’ view. This is not the pragmatist's escape, but an empirically based and philosophically justified position in which successful policies and practices resist unique ideological explanations.
Within the terms of his thesis, Pugh contends that what he calls a ‘whole housing-sector’ approach is the key: his framework is echoed later in Chapter 6 by Payne and Grover, but also refers back to Currie's rather neglected work some 30 years or more ago (Currie, 1966, 1976). Such an approach: combines the competing characteristics of private, public and self-help (that is, household) sectors; depends upon integral developments in land policy and housing finance; provides an environment where these roles and variables merge and are practised within an embedded institutional capacity; locates the saving-investment function largely within the domestic economy rather than external borrowing and agencies; and integrates housing within the national development framework of macro-economic policy, capable public administration and institutional reform. This ‘middle way’, of course, recognizes the persuasiveness of the macro-economic/institutional reform axis of the neo-liberals, yet endorses the critique of many of the ideological strictures of the enablement programme discussed earlier in this chapter.
With regard to distributional inequalities in the housing sector and the mixed experience of the remedial impact of subsidies, Pugh makes two crucial points that are consistent with his general thesis. The issue of subsidies cannot be defined and operated in an economically or politically neutral way as market enablement might contend: housing subsidies are the proxy for inequalities in the distribution of a fundamental urban resource that markets cannot correct independently. The argument, thus, turns on Pugh's second, and more crucial, point that sectoral inequalities such as these cannot be separated from the wider incidence of poverty and pre-existing inequalities in the distribution of income. In other words, as Rakodi argues in Chapter 4, we need to identify the diversity and the persistence of structural causes of impoverishment, not simply attempt to moderate poverty on the basis of the selective and targeted intervention inherent in the PRSPs discussed above.
In short, ‘success’ in the housing sector, measured in terms of enhancing the aggregate performance in efficiency, equity and capability welfare, depends less upon a universalistic or monopolistic developmental paradigm, whether leftist, rightist or centrist. Rather, it depends upon the interplay between different political economies, which may be both cooperative and competitive in different circumstances, localities and time periods. With regard to the housing sector, what makes the crucial difference, in Pugh's view, are institutional configurations and capacities, particularly at a national level. To the extent that his own thesis offers a way forward in reconciling the competing ideologies, Pugh contends that we can judge how best to combine them. Conceptual frameworks and principles exist that can reveal the economic and social costs, as well as the opportunities inherent in different models, from the level of the household, as well as in relationship to the wider economy. Good governance should, in theory, be able to optimize the combination.
Pugh's conclusions are pessimistic for neo-liberals and ‘welfarists’ alike, who seek the instrumentality of their position in terms of the performance of housing policy. Pugh does not find theoretical or empirical evidence for the link between ideology, policy and implementation to ‘good’ welfare. In any case, as his analysis of international housing policies makes clear, it is simplistic to cast approaches as either neo-liberal or social. Rather, policy tilts in different directions according to different paradigms. Currently, the World Bank and other international aid agencies favour a ‘thin’ state, a ‘thick’ market and ‘thickening’ community development roles.
In Chapter 3, Mohamed Hamza, taking the case of Egypt, shifts the perspective from a theoretical elaboration of the political economy of welfare to a discussion of the relationship between international assistance and state interests within a political economy framework. The chapter examines the macro-level impacts of the shift from a welfare and growth-with-equity paradigm to market enablement on the micro level of policy delivery and outcomes for shelter provision. The core of Hamza's argument is not so much that the paradigm shift has generated negative and unfulfilled aspirations. Rather, the full significance of these consequences can best be appreciated by examining the interplay between the macro-level setting for policy-making within an enablement context, and micro-level implementation and technical considerations. Critical to his analysis is the mediating role of the state and the compliant stance that it has taken to satisfy not only its domestic objectives but the wider economic and geopolitical interests of international donors. Perhaps uniquely, for a protracted period Egypt was successful in resisting the most pernicious impacts of enablement policies and the structural changes that they demand. Yet, in the end, as Hamza shows, this resilience has contracted against the imperatives of enablement and the internal political contradictions of the country.
From the 1950s, the Egyptian government assumed a more central role in development processes, with a firm social policy orientation. Since then, at a macro-political level, dramatic changes have taken place as the country has opened up its economy. However, as Hamza shows, so far as the shelter needs of the country have been concerned, these changes have not been reflected in practice because they have not been accompanied by reform of the structural or institutional frameworks within which these shelter programmes have been developed and implemented. To establish more precisely the relationship between macro-level policy-making and micro-level intervention, a conceptual framework that explores the effects of the role and nature of the state, foreign aid (primarily from United States Agency for International Development (USAID)) and economic reform (IMF/World Bank) is utilized. This framework is deployed to investigate the interaction between these three key elements and how they affected shifts and changes in shelter policies in Egypt.
The chapter argues that an understanding of the housing question can only be derived by putting it within this broader socio-economic and political context of development. By investigating the perceptions, priorities and criteria that drive the decision-making of key actors, and the state's central role in mediating between external and internal interests, Hamza shows how the policy outcomes reflect essentially technocratic answers to the country's severe housing problem, which is, in fact, largely structural in nature. This gap between the political and technocratic levels of policy-making and implementation is a central theme in the chapter. Over a protracted period, the distinctive responses to the shelter question in Egypt, at both levels, and under a highly complex and rapidly changing political environment, are reflected in the disjunctive outcomes that the chapter outlines.
As discussed earlier, a key challenge to the market enablement paradigm has been the extent to which the neo-liberal policy agenda has been instrumental in the escalating extent of urban poverty, and the impact of remedial programmes, such as PRSPs, to alleviate these conditions. In Chapter 4, Carole Rakodi explores these critical issues, advocating, like Cedric Pugh, substantial changes in concepts and practices if we are to move from remedial to structural impacts on poverty. She argues that lessons from the limitations of an earlier generation of urban shelter interventions, on the one hand, together with recent experience drawn from rural poverty studies, on the other, have improved our understanding of the nature of urban poverty and its multidimensional characteristics. The chapter draws on this evidence to derive a series of principles upon which to base the design for a new generation of projects and programmes that might more successfully reduce urban poverty while adopting more collaborative and beneficiary-centred modalities.
So far as the experience of earlier urban-shelter interventions is concerned, market enablers can represent sites and services and squatter upgrading programmes as archetypal examples of the failings of the growth-with-equity paradigm. While not gainsaying their limitations, Rakodi draws on the experience to maximize the potential learning for new initiatives for poverty reduction. Within this context, she highlights not just the well-documented technical inadequacies; more significant lessons are the political naivety that they expose in terms of their failure to provide effective local ownership of externally driven policy, and in their susceptibility to high levels of patronage and clientelism. Rakodi stresses how the lack of beneficiary involvement in both project design and evaluation ensured that neither the aspirations of the poor, nor the impacts perceived as critical by the poor, were taken into account. These important lessons resonate with the governance reform agenda, of course, but demand close attention if the current drive to develop poverty alleviation policies is to be more effective than these predecessors.
Recent research conceptualizing the nature of rural poverty is potentially more fruitful for urban policy. Rakodi identifies some similar limitations – notably, that poverty is usually defined by outsiders and neglects people's own definitions and direct experiences. The significant point she makes, in the context of current urban-sector policy-making for poverty alleviation, is to identify key methodological challenges: understanding the diversity of causes and the persistence of impoverishment (or improved well-being) for individuals, households and communities; establishing measures of the dimensions of poverty experienced by the urban poor; and recognizing that the poor are not passive recipients of external interventions, but people capable of adopting positive strategies for coping with impoverishment and using their assets to defend, if not to improve, their well-being. Although their challenge in escaping poverty is essential structural and not procedural, the importance of enhancing access to a range of assets – tenured land, financial services, social capital and safety nets, for example – is crucial in mitigating poverty impacts. The important conclusion that Rakodi draws on the extent to which macro-economic policy might be instrumental in poverty alleviation is this: potentially positive labour market impacts of economic policy have clear pro-poor objectives that must be delivered – this requires greater sophistication than is currently evident – while negative human-capital side effects, such as reductions in health, education and training, must be averted. Rakodi also points to the problematic tension between national policy determinants and local circumstances.
From this experience and understanding gained from these lessons, and drawing on current research and practice, Rakodi proposes a series of principles for urban poverty reduction projects and programmes. Among the key variables she identifies are: political legitimacy and participation; effective articulation with the needs and priorities of the poor; governance objectives, including local policy ownership, partnership between different actors and agencies, and planning, project design and delivery that are effectively institutionalized; and participatory monitoring and evaluation. Her principles are premised on collaborative design and implementation, reflecting the primacy of local stakeholders’ perceptions of the extent to which interventions have achieved agreed objectives, not merely externally defined criteria.
The successful application of these principles requires rethinking traditional approaches to planning and policy formulation and the instruments for programme and project. Using her recent experience in Kenya, Rakodi discusses the implementation of these principles in response to the needs of poor urban people through the selection of key project components, among which she identifies: preparing a poverty profile of the city; local stakeholder consultation; establishing a local steering mechanism to ‘own’ the process; provision for poor residents to voice their experience of poverty, and to identify and prioritize their needs; and a forum for agreement to be reached on project proposals.
Developing the project components into an operational process is not without problems. In the Kenyan case, Rakodi notes the challenges to successful collaboration, the desire by local authorities to retain a ‘controlling interest’ despite the lack of trust by other stakeholders, and the tension between professionals and politicians.
For pro-poor policies and poverty alleviation measures to be effective, Rakodi suggests a number of conceptual and practical issues that need to be resolved on the basis of her interim findings. Many of these issues speak directly to the governance reform agenda. She argues the need for stronger political commitment, at the urban and national levels, to pro-poor policy and decision-making, and a willingness to listen to poor people's analysis of their situation, priorities and solutions. For governance reformers, she makes the crucial point that unevenness of stakeholder bargaining power and negotiating capacity can undermine the ability of the poor to articulate and promote their interests, while also recognizing at the same time that collaborative structures need to capture the highly differentiated character of ‘communities’ – they are not homogenous entities. In terms of technical developments, donor support, project design and capacity-strengthening, as well as developing innovative funding mechanisms, all require major upgrading if they are to enhance poverty alleviation rather then be obstacles to implementation.
As argued earlier, separating the production and provision of key urban services from the wider institutional, spatial and social policy framework runs the risk of disaggregating rather than coordinating urban policy and development. Rakodi points to a similar danger of ‘sectoralization’ in poverty alleviation interventions. For pro-poor policy and practice to be effective, this dramatically increases the need for effective inter-organizational networks, institutional collaboration and multi-sectoral coordination, while accepting room for manoeuvre between the actors, agencies and donors. These characteristics, in turn, require a level of political and democratic maturity that may not be available.
In Chapter 5, Gareth Jones introduces a rather different perspective on the implications of market enablement for the urban sector, by reviewing what urban policy-makers can learn from rural contexts. Yet, because poverty alleviation is the underlying theme of his chapter, in many respects it complements Carole Rakodi's discussion. Like Rakodi, Jones draws on rural experience. The lens for his analysis, however, is land – as a concept but also as a commodity and an asset, which, under conditions of market enablement, raises complex questions for policy-makers and researchers about access, rights, distribution of ownership, investment and productivity.
Jones challenges the typology that differentiates urban and rural space, arguing that we have much to learn from the (physically and intellectually) contested territory of the urban/rural or the peri-urban. After all, it is largely through the urbanization of the rural hinterland (to introduce a third definitional category) that the phenomenon of city growth is manifest – a figure of 500,000 hectares per year is presented. Noting that the concepts of urban/rural and peri-urban have been picked up as an emerging policy issue by such agencies as the World Bank and DFID, we know little about the peri-urban conversion process under recent conditions of market enablement in the developing world. This chapter remedies this deficit by rejecting the ‘spatialization’ of development thinking, proposing, instead, a multi-spatial alternative that bridges the rural–urban divide and seeks to understand the complex spatial and thematic dynamics that take place in this environment.
The essence of Jones's argument is that while land use, land markets and land conversion are central to urban policy-making, nowhere more so than where they are most dynamic in peri-urban space, these processes cross predefined rural and urban categories. A rigidity of thinking in spatial terms constrains policy-makers from thinking imaginatively about problems such as ‘illegal’ land conversion and social exclusion. As he points out, recent World Bank (2000) and DFID (2000) policy statements exemplify the limited and often contradictory thinking upon which much current policy-making is based. Each report promisingly recognizes the potential for fostering rural–urban synergies, and the importance of the interdependent markets of the ‘urban’ and the ‘rural’ that link the exchange of people, goods, services, capital and social transactions. Yet, at the same time, these reports propose discreet policy initiatives that betray binary thinking.
As Jones asks, to what extent are urban and rural developmental problems predetermined by, for example, policies affecting agrarian or customary land tenure or programmes of social development in rural areas, or, conversely, by the failure to realize why the ‘urban’ poor (and, more often, urban elites) act as predators on impoverished rural dwellers who capitalize land assets in what is essentially a rapidly urbanizing marketplace. In World Bank and DFID policy, the poor are replaced by preconceived actors in preconceived spaces. Yet, it matters less that they are either rural or urban than the fact that both are poor and are compelled to adopt market strategies that will impoverish them further. In a policy divide, both are asset losers and both are exploited by wealthy elites who mediate the transfer from cheap rural farmland to expensive, and frequently illegally, developed urban land. The rural dwellers probably undervalue their land assets, while the urban poor struggle for a foothold in unregulated land markets where prices accelerate out of their reach.
From a rural perspective, basing policies on the assumption that because farmers feed cities and urban residents buy food, both populations will benefit from a strategy that commercializes agricultural production yet reduces the staple food prices for urban households by unregulated competition, grossly oversimplifies the interaction. Conversely, from an urban perspective, market-led housing policies and urban spatial strategies invariably pre-empt the peri-urban areas as the marketplace for urban development. Simultaneously, and in contradiction, rural land reform constrains the capitalization of agrarian land as an urban resource to reduce landlessness and increase the productive capacity of the rural to feed the urban. Regularization projects may produce shadow pricing effects on land anticipated for future regularization; but this may be classified as ‘rural’ land and, thus, ‘off limits’ to a particular urban policy agency.
In these examples, the land market is neither precisely urban nor rural in spatial terms, but can only be conceived as a resource in a marketplace where different actors and interests compete. In a dynamic marketplace, this questions the extent to which market enablement policies either enhance urban productivity or alleviate poverty in the terms required by the neo-liberal agenda; the outcomes are neither spatially nor economically efficient, while social and spatial inequalities are accentuated.
In the end, the essence of debate and, thus, of policy-making for urban/rural or peri-urban land lies not in the visible process of spatial/physical conversion per se, but the invisible processes of who holds the land and, for the mass of urban poor in this marketplace, how tenure security is embedded. The telling point which Jones makes about the World Bank's drive to tenure security as a key plank in market enablement is that most tenure programmes neglect the spatial dynamics that they create, overlook the poorest of the poor and ignore the impacts on their marginality. Yet, while policy-making may be disjunctive, the impacts clearly demonstrate the connectivity between two segments of the same market in which the impacts of intervention are not spatially differentiated. Moreover, spatially fragmented policy ignores the fact that rural land is susceptible to the same catalogue of problems as is urban land: squatting; contested claims; inappropriate regulation; eviction; and highly skewed and unequal distribution of ownership.
In bridging the urban–rural divide Jones, like Rakodi, draws on concepts, policies and reforms in the rural setting to highlight implications for urban land reform. He reviews the extensive research on the key building blocks for urban land market enablement policies: governance; formalized legal protection of rights; the relationship between land titling, investment and rising productivity; security and collateral borrowing; and price effects and social exclusion impacts of land market and property rights reform. In all of these aspects, the findings are ambivalent. At best, the supporting evidence for market-led reform is muted; at worst, the prognosis for improving the productivity, efficiency and social equity of urban land markets is disconcerting.
The case for locally adaptive, rather than radically new ‘replacement’, systems of tenure emerges strongly. The significance here is to question, as Payne and Grover do in Chapter 6, the World Bank's drive for conventional and weakly differentiated tenure systems to replace the variety of informal mechanisms, even though they, too, are problematic. On the other hand, Jones also warns against placing too high expectations on community-based arrangements, which Payne and Grover advocate. These are not necessarily more egalitarian; they are contingent upon asymmetrical power relations, and their obligations may disadvantage marginal members of the community – for example, the elderly and women.
On balance, Jones shows (endorsed by de Souza and Zetter in Chapter 7) that de facto as much as de jure title security seems to be the key variable. Although the neo-liberal reform process persists in demanding de jure systems, legalized tenure may not be cost effective because it drives up the price and use costs of land. Moreover, like de Souza and Zetter, Jones demonstrates that enforcing rights through formal judicial systems can increase land disputes; but, equally, collaborative land rights systems can be abused because powerful individuals have vested interests in dispute outcomes. These are pertinent reflections for reform in the urban setting, which are largely following the same template.
As de Souza and Zetter bear out in Chapter 7 with regard to the price effects and social exclusion impacts of land market and property rights reform, Jones confirms the inevitably of rising land prices and regressive and exclusionary outcomes for the poor and landless.
To the extent that security and collateral borrowing are linked, the larger constraints are: availability of lending channels; differential access that groups and individuals have; high transaction costs involved in formal-sector lending; and the remarkable resilience of informal though exploitative lending institutions. This evidence seems to corroborate the experience in the urban setting, pointing to the need to ensure that market-led policies designed to stimulate innovative and progressive measures do, indeed, support the needs of the poor.
Overall, the conclusion points to the need to avoid the doctrinaire land reforms that market enablement demands; instead, approaches should be developed that benefit the poor through more innovative, and incrementally and socially acceptable, systems that resonate with the way in which property rights are formed and maintained.
These crucial conclusions also constitute the theme of Chapter 6, in which Geoffrey Payne and Richard Grover use the experience, and subsequent collapse, of command economies as a viable model for housing provision in order to explore alternative and, essentially, hybrid approaches to satisfying housing demand. The chapter contextualizes the discussion by recognizing the importance of the public sector – whether as zealously and ideologically driven as the communist model or not – as a means of meeting the shelter needs of all citizens, or at least of those unable to satisfy their needs and aspirations within commercially driven markets. It explores in some detail the experience of socialist countries. Despite, or perhaps because of, the pre-eminence of the state in determining the spatial and social allocation of resources, such as housing and land, in accordance with officially determined policies, targets, standards and procedures, the supply-driven approach failed to deliver its aspirations. Even if housing production itself was not a state monopoly, many countries adopted socialist approaches to other critical urban development resources. For example, in half of the 40 sub-Saharan countries, the state also nationalized all land, thereby increasing its monopolistic control over urban development. Payne and Grover show how command economies failed in housing, as in many other sectors, partly because provision gradually became driven by political and technical considerations, instead of being based on social needs or resources, partly because the concept of ‘value for money’ was absent and because of the internal inefficiency and the burden of costs on the national economies.
But it was not only internal contradictions that caused the model to implode. The collapse has been accelerated by external forces, especially through the insistence by the IMF and World Bank on market reform policies as the condition for international investment. The World Bank and USAID have encouraged the privatization of the public housing stock and the emergence of private land and housing markets. Nevertheless, as Payne and Grover demonstrate, the legacy and consequences of the command model have impacted on the newly imposed market-driven provision in the so-called transitional economies. Many pitfalls have been encountered in the rapid retreat from state control to market-oriented strategies. In Armenia, for example, internal conflicts between the ‘old guard’ who obstruct innovative policies (vested interests, as well as principles) and the younger, new professionals who are often unable to put new ideas into local practice have created a bipolar approach that runs the risk of rendering public bodies even more ineffective and discrediting new approaches before they have been given a chance to prove themselves.
Recognizing, equally, the limitations of an unregulated market enablement model as the means of satisfactorily fulfilling housing needs (its crude and rapid imposition has been particularly problematic), Chapter 6 examines various approaches to breaking the impasse at either local or national level. In order to overcome both the antipathy between public- and private-sector interests, and the constraints that this has imposed on opportunities for innovation, the authors make a powerful advocacy for the emerging and experimental practices involving different forms of collaborative partnership between public and private sectors. Using examples from contrasting locations and countries – such as Ankara, Moscow, Nepal, Pakistan and Lesotho – they show that between the two extremes, the public sector can play a variety of facilitative and proactive roles in supporting urban land development and housing provision. Such approaches are enabling, in the literal sense: the state (without being directly involved as developer or producer) plays a critical catalytic role. The chapter argues that these less ideologically extreme, more pragmatic, responses offer a potentially more responsive and valuable way of providing housing for the mass of the urban poor in fast growing cities than either cumbersome bureaucratic archetypes or marginalizing neo-liberal systems.
The last two chapters are country-specific case studies – Brazil and Colombia – that provide empirical evidence of the micro-level impacts of market enablement on, respectively, urban land supply and urban restructuring. In Chapter 7, Flávio de Souza and Roger Zetter complement and further develop the study of land and housing supply processes discussed in Chapters 5 and 6.
De Souza and Zetter provide evidence from Recife in Brazil to show how the state's current market orientation essentially endorses, or accedes to (perhaps by neglect as much as by explicit policy design), a market-driven process of land delivery. Taking a key area of the urban policy enablement agenda – tenure security – the chapter shows how this process is resulting not in decreasing inequality, but in continued insecurity and marginalization of the urban poor, an enduring affordability crisis and the continued polarization of social classes.
Brazil, of course, provides a celebrated example of the transformation of the policy apparatus, notably in the urban and housing sectors, from a notoriously centralized, interventionist and regulated state (most evident during the military regime from 1964 to 1979 and the subsequent democratic transition period), through economic collapse and SALs to a market-led economy in which the state increasingly assumes a peripheral role. Although other Central and Latin American countries have followed the same trajectory, Brazil, and perhaps Mexico, too, provide prime examples, largely because of the size of their economies and the extent of their indebtedness during the 1980s.
Much of the evidence from the growth-with-equity period in Brazil, as de Souza and Zetter recall, was of a failing state in so far as housing supply was concerned. Despite considerable output, the hugely ambitious target to meet an estimated housing deficit of 8 million units was never remotely achieved. The same is true of most sectors of public policy intervention. In the outturn, large state agencies (such as the much researched National Housing Bank, or BNH) were responsible for mass housing construction, which supported and co-opted the interests of the prevailing elite instead of targeting the urban poor who commodified their homes in reaction to the downward raiding pressures of middle-income groups. To this extent, the experience endorses the inefficiencies and structural weaknesses widely attributed to the welfare paradigm. The particular interest in Brazil, so far as this book is concerned, is whether the transformation from the archetypal, but clearly failing, growth-with-equity model to a radically new development paradigm has been any more successful in tackling the highly inequitable distribution of key urban resources, such a land for low-income group housing.
Between 1979 and 1986 democratic transition took place. The centralized state collapsed, and in the new democratic climate the foundations for market mechanisms and decentralization were established. In the field of housing for the poor, new mechanisms to deliver housing and services were set up through the establishment of Social Interest Development Zones (Zonas Especiais de Interesse Social, or ZEIS). The ZEIS programme was designed to serve the dual purpose of promoting land tenure security through the legalization of squatter settlements and upgrading the living conditions of existing informal settlements. By shifting from a direct intervention approach to community-based initiatives, the goal of ZEIS was to secure tenure for residents through partial governmental control of the housing market in these circumscribed areas of the city.
However, from the evidence in Recife, neither tenure security nor the overall living conditions of the poor living in Recife's 600 squatter settlements have improved. While the ZEIS designation represents a process for recognizing squatters’ rights to occupied land, the potential for tenure security under these arrangements has not been realized. A crucial reason is that the transferral of property rights from landowners to possessors (illegal occupants of land) has been far less efficient than necessary. The declaration of ZEIS areas is the initial turning point towards security; but the municipality lacks the capacity to make the declaration legally binding. More significantly, the ZEIS mechanism has not matched the expectations of the illegal residents because the process has produced ambiguous consequences. Households’ perceptions of tenure security do not appear to increase; indeed, the process introduces a new platform for insecurity that is displayed through disputes in court from which households still face the possibility of eviction. Against the background of the inelastic supply of urban land in preferred locations (where job opportunities exist) and soaring land prices because of the overall scarcity of land available for housing, access and regularization are increasingly disputed processes. This leads to violent clashes not only between landowner and invader, but also between invaders themselves.
The key point that de Souza and Zetter emphasize is that formal housing provision, either through state or market mechanisms, introduces economic, political and technological dependency for low-income urban dwellers and the collapse of the informal housing networks, which are critical to their survival. Moreover, new forms of governance and partnership are not sufficient to improve the conditions of impoverishment.
The deficiencies in land tenure security in the present climate are reminiscent of the highly unjust tenure arrangements promoted during the authoritarian welfare state. These apparently contradictory outcomes reflect the contradictions inherent in the contextual environment of the development paradigms. Paradoxically, these appear to form a continuum in space and time where the prevailing elite benefit most. By neglect or by design, the poor and the needy have been excluded from the urban agenda. At best, the poor are on the periphery, suffering from the consequential insecurity and marginalization of state policies.
Chapter 8 is the second country-specific, micro-level investigation of the impacts of market enablement, in this case on the urban restructuring of Bogotá. Despite the dramatic impacts of globalization and market enablement policies on urban structure, this subject has received less attention than the processes that are shaping urban development. Where the transformation of city structure in developing countries has been studied, this has mainly been at the macro level. However, market enablement policies also have potentially enormous impacts at a more localized spatial scale, and the fact that little attention has been given to this scale provides the opening for Chapter 8.
Andrés Ortiz-Gómez's and Roger Zetter's subject of spatial change complements Chapter 5; but the peri-urban locational focus of the latter study contrasts with the authors’ concern with the intermediate urban areas or districts – essentially, the city's main middle-order sub-centres with a mix of businesses and commercial functions, larger recreational and educations facilities, and established residential areas that surround and support them. The micro-level study of the reconfiguration of these neighbourhoods raises a set of policy issues and research themes which, although clearly subsumed within the macro-level neo-liberal urban reform agenda, have particular characteristics and dramatic implications.
Taking four local land uses – enclosed condominium housing; shopping centres and hypermarkets; parks and urban recreation; and elementary and high schools – Ortiz-Gómez and Zetter show how a simultaneous process of atomization and fusion has taken place in providing these services and functions, as well as the form of urban development traditionally found at this intermediate urban level. These processes have exerted a powerful influence on the redistribution of these land uses and the pattern of urban services. As a result, the spatial configuration of the city has been restructured. Thus, while some services and functions have been displaced to a more local level (what the chapter terms ‘atomization to the micro level’), others have been displaced to the metropolitan level, mainly on the urban periphery (‘fusion at the macro level’). This has produced the near elimination of the intermediate or neighbourhood level as a fundamental component of urban life, recalling Webber's classic analysis of the emerging ‘non-place urban realm’ of the 1960s’ US West Coast (Webber, 1964).
Ortiz-Gómez and Zetter describe how the unregulated redevelopment of residential areas in Bogotá in exclusive, secure condominiums is having two effects. On the one hand, it is leading to the atomization and piecemeal redevelopment of previously integrated neighbourhoods. On the other hand, following the planning standards and regulations for open space provision, the process of building condominiums is, in effect, privatizing public open space by incorporating these areas within the redevelopments. The major relocation and growth of private education – accounting for half of the city's school-age children – is taking place by capitalizing on the sale of existing high-value sites within the city and relocation on cheap peripheral land in the north of the city. Given the city-wide catchment areas for the schools, the resulting congestion impacts are severe. Finally, the global reach of retailing multinational corporations (MNCs) is reconstructing Bogotá's provision on much the same lines as in Europe and North America: the closure of neighbourhood stores in the intermediate centres and the development of peripheral hypermarkets.
Chapter 8 explains these outcomes in terms of the increasing ‘privatization’ of social and planning responsibilities, combined with an unregulated, entrepreneurial development regime. The government has followed the orthodoxy of the enablement and governance reform agenda. Municipal decentralization was enacted in 1986 within the city, while peripheral authorities have retained their autonomy. These reforms have substantially impeded the potential for developing an integrated, metropolitan-wide strategy to tackle the atomization of the city. At the same time, reform of the planning machinery has introduced new norms based on the incorporation of new development land and the redevelopment of the existing fabric concentrated exclusively in the hands of the private sector. The failure to adapt the city's planning policies, instruments and institutional capacity to the changing conditions and processes of urban space has not just fragmented the city, it has also created the conditions in which such an outcome was inevitable. But the more disturbing consequences for residents and policy-makers alike, as Ortiz-Gómez and Zetter show, are that by causing the ‘extinction’ of Bogotá’s urban intermediate level (the neighbourhood), these processes have contributed to the disintegration of community structures and a disaggregated pattern of urban development that is, ultimately, unsustainable. Restructuring the city under conditions of market enablement and globalization has had profound social, spatial and environmental impacts.
This micro-level study of the spatial reconfiguration of the city, therefore, intriguingly opens a window onto a macro-level set of urban processes and relationships concerning the rationale of the market, which are at the core of the book. Ortiz-Gómez and Zetter are pessimistic about whether or not the demise of the urban neighbourhood can be reversed. Rather, their argument is that we need to understand more fully how and why cities are being restructured before we can develop strategies to manage this new reality in a sustainable way.
From varied perspectives – theory to practice, macro to micro, state to global, poverty to prosperity, autonomy to collaborative action – this book provides detailed insights into how the urban sector in the developing world has responded to the neo-liberal agenda of market enablement and its associated processes of globalization, structural adjustment and urban management reform. Because cities are the main platform upon which this paradigm is developed, they also reveal the often disjunctive impacts of this paradigm most powerfully.
1 By the mid 1970s, as the IMF reduced its lending to developing countries, commercial banks had stepped into the frame in order to recycle petro-dollars, while for the least developed countries and non-oil exporting developing countries, this became an attractive borrowing channel to ease their balance of payments deficits (Reed, 1992; Dasgupta, 1998).
2 The three moments are the inclusive, differential and managerial. In the last moment, differences are acknowledged, but are arranged and managed to marginalize dissent within a consensus supporting the general model of global capitalism (Hardt and Negri, 2000).
3 Nordhaug (2002) posits three main theoretical positions: economic globalization from below (transnational globalization through economic organization, capital flows, etc); globalization scepticism (indicating a more autonomous capacity for national mediation of global forces); and Marxist – globalization from above (transnational institutional, organizational and class alliances).
4 There is an inherent contradiction in the neo-liberal position. Theoretically, it promotes individual choice and autonomy, thus logically distrusting collective and associative organization (Bourdieu, 1998); but, in practice, neo-liberalism promotes a governance and urban management agenda that advocates associative processes in a stakeholder society. To the extent that this contradiction can be resolved, it is because communitarian models of government simultaneously atomize control and drive towards consensus around market-led development (Held, 1995; see also note 2). In this way the articulation and coexistence of contradictory interests can be accommodated in tension. Thus different interests do not, in the end, obstruct the logic of the market as state-run urban management is claimed to have done.
5 Government budget allocations fell by about 4 per cent for education between 1975 (before adjustment) and 1988 (after adjustment) as an average of 19 adjustment countries (from 16.3 per cent to 12.2 per cent of total government expenditure). This compares with an average increase in expenditure of over 2 per cent in 12 non-adjusting countries. For the health sector over the same time series, the figures show a 1 per cent decline (from 5.8 per cent to 4.7 per cent of government expenditure, compared with a 0.3 per cent decline for the sample of non-adjustment poor countries; Watt, 2000).
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