4 Dec 2014 12:11pm

The rise of megacities

Mega-cities are powerful metropolises with larger populations than some countries. But with their rapid growth over the past 50 years has come weakness, writes Nick Martindale. So how will this be addressed?

The rise of cities is one of the most obvious by-products of the industrialisation of economies over the past two centuries; a process that has repeated itself around the globe and throughout the decades, as countries and entire regions developed at different rates.

The arrival of the mega-city – those with more than 10 million inhabitants – is a somewhat newer phenomenon. Just 40 years ago only New York and Tokyo fell into that category, today there are 29 mega-cities globally, with the majority in the developing world. Another 10 are expected to join the list over the next decade, according to research conducted by Joel Kotkin, a fellow in urban studies at Chapman University in California, and author of The Problem with Megacities.

As is often the case when attempting to measure such widespread trends there is a degree of debate, in this instance over what constitutes a mega-city and exactly how many there are today. But the overall trend for the world’s metropolises to expand – and the largest to become even bigger – is undeniable, and at times the sheer scale makes them hard to comprehend. Shanghai, for instance, now contains more people than the whole of Australia, according to figures from the Centre for Economic and Business Research (Cebr) and the World Bank, while Beijing sits comfortably ahead of nations such as Portugal and the Netherlands.

This mass rush towards cities has created a number of issues, ranging from overcrowding to social tensions; pressure on infrastructure which is often either crumbling or non-existent; congestion; high levels of crime; unemployment; and environmental and health concerns.

People get scared because the image they want is of a city of the rich

Dr Janice Perlman

Dr Janice Perlman is founder and president of the Mega-Cities Project, and has devoted her career to understanding the issues that emerge in mega-cities, including tracking different generations in Rio De Janeiro over a 50-year period for her book Favela: Four Decades of Living on the Edge in Rio De Janeiro.

Perhaps surprisingly, given the problems she has tracked, Perlman is an advocate of mega-cities. “I see them as a solution to other problems such as the lack of potential for fulfilling human life aspirations in the countryside, and very positive for creating a dense and proximate co-living among diverse people,” she says. But it is the “favelas” – a Brazilian term that could be used to describe the areas in many mega-cities in the developing world where immigrants from the countryside have settled unofficially on land close to the centre – that cause most concern. “In effect they are squatting or invading land that has been left unguarded,” she says. “People get alarmed because the squatter settlements or shanty towns grow more rapidly than the rest of the city, and people get scared because the image they want is of a city of the rich.”

The image of the city is not the only issue. Dr Christopher Boyko, a senior research associate at Lancaster University, also points out the health issues that can arise from having a high-density population, putting pressure on the facilities that do exist. “The main issues include satisfying demand for resources without over-using what is available,” he says. “This involves issues of equality, so that everyone in mega-cities has access, for example, to affordable and clean water; giving everyone a chance to be involved in political decision-making around urban matters; and providing everyone with the skills and the economic infrastructure to be resilient to change.”

Nor are such issues confined to conurbations in the developing world. Stanley Johnson, former MEP, author and environmental campaigner – and father of current London mayor Boris Johnson – recently hosted an event organised by Tomorrow’s City, discussing how London needs to respond to the challenges of becoming a mega-city. He cautions against the “unlimited expansion of London’s population”.


“You see these mega-schemes such as HS2, which is being promoted as a way of increasing the connectivity of London and the rest of the UK,” he says. “I can’t help feeling that it is going to increase the movement of the rest of the country to London. The social consequences of it are likely to be dire.”

Yet mega-cities are set to increase in number and scale. With that comes a need for infrastructure to support both existing populations and those expected in the future. Kotkin points to the need for more and better hospitals, more effective transportation systems and better preparation for threats such as flooding. But he also suggests building up smaller cities into larger entities that are not mega-cities; something he says is already happening in Mexico and India, as immigrants believe they offer better opportunities than the established mega-cities.

“These mega-cities are evolving at a time when the labour content even of manufacturing has dropped dramatically, and we’re going to have ever more automation,” he points out. “They are coming around at precisely the wrong time.”



These mega-cities are coming around at precisely the wrong time

Stanley Johnson

Some countries are investing in infrastructure, as in the case of China. Here, though, urbanisation has taken place at such a pace that it has outrun population growth, says Danae Kyriakopoulou, an economist at CEBR. “This has had a great effect on the environment and pollution, but also the quality of life in the cities,” she says. “Social tension and inequality are rising.” Indeed, some 20 such cities stood completely empty in 2013, according to the investment blog Zero Hedge. “They’re pouring a lot of investment in just to keep building and keep generating growth, without actually needing to build these cities,” says Kyriakopoulou. “There are no roads going to them; there is no infrastructure. They are just empty.”

China, though, has an inherent advantage over Western governments, due to the centralised nature of its political and administrative regimes, argues Kathy Pain, professor of real estate development at the University of Reading’s Henley Business School. “The mega-city regions have become so big that they have overspilled their governance and administrative boundaries, so policymakers have got to work together. That proves to be one of the most difficult things because they all tend to be in competition,” she says. “China has an advantage here, because with the Communist system nationally they’re still able to do strategic planning. That’s essential to really grip this dilemma.” The country is also in a better position to cope with further movements to urban areas, she adds, and has the capacity to invest more in health and education systems in a way the West – with its ageing populations – cannot.

Yet even when investment comes, it can be misdirected. “The first thing that most governments do when they want to do something positive is to extend the sewer, electricity and water systems to these new settlements,” says Perlman. “This is fine, but the problem is that if they then set aside more land for new settlements they’re usually only able to buy inexpensive land far from the city, and these newcomers need to be near the city to get work. They would rather squat in a location that’s closer to the city so they can start building up their families’ assets than be isolated in public housing or sites that are too far away from the jobs market. That wasn’t the purpose of coming to the city.”

It’s a dilemma that sees bus-loads of people transported in and out of places such as Dubai, she says, arguing what is really needed is a change of attitude on behalf of both governments and wider populations, with an acknowledgement that a city is not just for the elite, and indeed requires people who are willing to take on relatively low-paid jobs.


Any kind of strategy designed to address the social, economic and political issues around mega-cities is fraught with difficult decisions. Debates over whether to construct a flashy subway network – to generate investment and jobs – ahead of a basic sewerage system can prove controversial, says Kotkin, and has contributed to social unrest in places such as Istanbul and São Paulo. “There are very difficult choices that the mayors and governments in these cities are going to have to face,” he warns.

Against a backdrop of rising investment in infrastructure – by 2030 global investment will have increased by around 60% with £34trn being spent during this period, according to some estimates – governments need to improve the way they go about prioritising decisions. ICAEW has been active in this area, stressing the need for a greater understanding of the realities surrounding private sector investment among politicians, and for better commercial skills among those given the task of delivering such strategies.

“A lot of the developing countries are going to need private sector investment because they don’t have the funding themselves to provide the necessary infrastructure,” points out Sumita Shah, regulatory policy manager at ICAEW. “There has been controversy in the UK about the private sector making enormous profits for its own gain, but its role is to invest in commercial deals and its shareholders want to make a profit. Why would it not price risks into deals? The public sector needs to fully understand private sector motives and the impact of large-scale investment.”

Investors need to see a clear plan around ongoing funding, she adds, particularly issues such as income and ongoing maintenance.

Chartered accountants have a role to play here, in helping to fill any knowledge gaps that may exist in the public sector. “They have the right skills and can also bring in some of the commercial and wider strategic aspects that they accumulate through their business knowledge,” says Shah. “But projects also need other skills, including those of engineers and lawyers. It’s essential to have the right project team in place.”

There are also opportunities to get involved in developing large-scale projects in places such as the Middle East. “Some of the cities that are being built in Saudi Arabia are essentially reverse public-private partnerships, where the state entity puts up the capital and the private sector meets running costs for a brand new city,” says Ben Everitt, manager, strategy and risk, at ICAEW. “There’s obviously a huge interest for chartered accountants in that, around sustainable public finances. More than 80% of FTSE 100 companies have a chartered accountant on their board. It’s that level we feel chartered accountants are able to operate at. Chartered accountants think strategically.”


In the long-term, infrastructure investment coupled with effective social policy from governments can have a real impact in transforming both the conditions and prospects of people who make up the population of mega-cities, suggests Perlman; at least in the case of Brazil, over the past five decades. “When people have had an opportunity to gain from public policy it’s much better,” she says. “The interesting finding is that the consumption of individual consumer goods, household appliances and collective urban services by people who came to the city as migrants in the 1960s is about average for the rest of the municipality of Rio.” Education levels have more than doubled, she adds, and illiteracy has been virtually stamped out among the third generation of immigrants.

What remains, though, is the social stigma for those still in the favelas; and it is this that may be the greatest challenge mega-cities must confront. “Around 50% of the grandchildren now live in a rental property or have bought their own land a little further out, and have completely integrated,” she says. “But the ones who stayed in the favela because they wanted to be near their extended families have found it harder to translate their educational advances into jobs.

“If I was to tell a public policymaker what to invest in, I would say that the people who didn’t have public investment in early infrastructure managed to take care of it themselves,” she says. “What has not been achieved over these generations is to have the same respect and dignity, and to achieve what I call ‘personhood’. That’s the poignant part of the story; no matter how well they have done economically they are not treated as full citizens. You can expand your physical wellbeing, but still not be considered a person.”

Nick Martindale




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