The government should not fight the expansion of cities or the migration of people from villages, as that would amount to fighting prosperity, says the World Bank’s latest world development report on reshaping economic geography. CNBC-TV18’s Abhijit Neogy reports.

Raj Thackeray and the Marathi Manoos may not like it but the World Bank talks appreciatively about three million people moving out of Bihar and Uttar Pradesh to Maharashtra and Punjab in the second half of the 1990s. Lifting people out of poverty requires shifting populations from villages to cities. This process of migration should be welcomed and encouraged, says the Bank’s latest world development report on reshaping economic geography.

Here are the keys to prosperity, according to the report.

– Density = prosperity

– Distance from economic centres = more poverty

– Division or barriers to mobility impede progress

Railway Minister Lalu Prasad would not get the best economic value for his election-eve investment in rail factories in Madhepura and Rae Bareilly because efficiency comes from concentration of production, which governments should encourage. The report frowns on incentives to disperse industry for balanced regional development or transfer of tax resources to the laggard states.

The report says urban agglomerations pack the most economic power and cites the example of Tokyo where 35 million people or a quarter of Japan’s population is squeezed into four percent of its land. Rather than fight migration, the government must improve living and working conditions in cities, it says. Poverty increases with distance from economic centres, so policies should aim at cutting down the cost of transportation. Mobility of people and products increases prosperity, so governments should work toward eroding divisions or barriers to economic transactions.

The report does not quibble with social security measures like the rural jobs scheme or Bharat Nirman, which is meant to provide amenities in rural areas. But it raises important questions: is economic efficiency all there is to development? Can policymakers ignore the social and political costs of migration? A controversial report no doubt, but a useful one, if it forces a policy rethink.

source: moneycontrol

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