Economic development in cities and regions

Module topical coverage

• Urban-rural linkages for infrastructure planning and delivery
• The economic importance of secondary cities
• Regional development, economic corridors and cross-border links
• Landlocked and small island developing states (SIDS)

Introduction

Economic development opportunities and risks in cities can vary as cities become more complex economic systems with larger populations. This is further complicated by the changing definition of what constitutes a city.  Secondary cities, including small and intermediate urban areas, are much more numerous and account for a significant proportion of current and projected urbanisation in LMICs. However, projects in mega cities and proposals for new capital cities often get more political attention, as is the case of Kabul in Afghanistan, Nusantara in Indonesia, Naypyidaw in Myanmar and Dodoma in Tanzania.​

Countries can be dominated by one mega-city or its capital and political centre, as the case of Nepal where Kathmandu Metropolitan City is the only centre in Nepal with a population above a million, being both the political and economic centre of the nation. Border regions are important for regional power grids and transport networks, where corridor development is often promoted to facilitate trade and integration. Geography can also create other challenges for development – e.g. in Small Island Developing States (SIDS) and landlocked countries, where connectivity and access to markets require targeted infrastructure investments.

In all cities and urban areas, the risks faced by people and assets from hazards associated with climate change have increased considerably in recent decades. Low-income communities living in informal unplanned urban settlements are amongst the most vulnerable to climate change. These settlements are typically characterised by inadequate access to basic infrastructure, including water supply, sanitation, electricity and paved roads, which compounds exposure to environmental hazards such as flooding, landslides and extreme heat. The infrastructure deficit in informal settlements also contributes to broader social challenges, including elevated crime rates, social exclusion and limited economic opportunities. Research indicates that the poorly lit streets, lack of secure tenure and absence of essential services create environments where violence and insecurity can proliferate, undermining community wellbeing and perpetuating cycles of poverty. Mayors, as political leaders, can be pivotal in driving effective urban governance, but their influence may also be constrained by tensions with national government or by capacity and capability gaps.

For the UK’s Foreign, Commonwealth & Development Office (FCDO) and partner governments, it is essential to identify and enable the most suitable approaches to the specific characteristics of each city or regional context. The UK has considerable experience of working on cities, from the Slum Improvement Programmes in India during the 1990s to the Nairobi Railway City project of the 2020s.​ Such initiatives demonstrate the importance of adapting strategies to diverse urban settings and their development outcomes.