Latin America is one of the most urbanized regions in the world, and although cities have grown in a disorderly and informal way they are some of the most populated cities in the world.
The metropolitan areas of Mexico City and São Paulo each exceed 20 million inhabitants; the problems due to excessive and accelerated disorderly growth are endless and grave.
In its report, RED 2017 Urban Growth and Access to Opportunities: a Challenge for Latin America, CAF (Development Bank of Latin America) has explored in depth the challenges of the big Latin American cities and Pablo Sanguinetti, Chief Economist of CAF, has addressed the issues and obstacles in an interview with EXPANSIÓN.
What are the main problems suffered by Latin American cities?
First of all, we must bear in mind that with 80% of inhabitants living in cities, Latin America is one of the most urbanized regions in the world. This urbanization is recent and occurred faster and more disorderly than in other regions such as Europe or the United States. This historical process has implied problems of informality in three dimensions: housing, transport and work. This triple informality is the main cause of the low levels of productivity and well being in the cities of the region. That is why cities in Latin America despite their high density and quantity of population offer fewer opportunities for development than their peers in the developed world.
How can these problems be solved?
Public policy initiatives should be directed towards three main areas: the regulation and planning of land use, the improvement of transport and mobility infrastructure, and the strengthening of the formal housing market. Among the measures to be taken, the creation of a regulatory framework that favors the residential and mixed-use of urban land, and that permits the expansion of the city in an orderly manner and with access to transport infrastructure and services, should be considered. Regarding policies for transport and mobility, it could be relevant to establish taxes on congestion that fall on car users according to schedules and places of use, the integration of informal public transport solutions with the formal network and the construction of more roads exclusively for high capacity public transport
How much should be invested to solve those problems?
It is difficult to make calculations of the size of the necessary investment since it depends on the aspects that each local government prioritizes and on restrictions that go beyond the economic sphere. But it is important to clarify that well-planned and implemented urban development investments can be financed on their own. Urban development investments value of the land and those profits should be returned to the city. Also, as I said before, not all urban improvement policies involve spending public resources; many of them are regulatory in nature.
What governments are taking steps forward to solve them and how are they doing it?
There are several municipal governments from different cities in Latin America that are taking appropriate measures. There are paradigmatic cases, such as the improvement of public transport by increasing the coverage of cable cars in La Paz, the creation of several sub-centers of business in Mexico City, the expansion of the network of exclusive bus lanes in Buenos Aires. , the traffic restrictions according to air pollution levels in Santiago, Chile, or the development of a solid metropolitan institutionality in Medellín and the surrounding municipalities. However, very few municipal governments are making a holistic effort that combines good practices in various policy dimensions, simultaneously.
This is an election year in Latin America with important appointments in Mexico, Colombia or Brazil. What changes do you think may occur in the political landscape of the region and, therefore, in the economic one?
This will be an important year for Latin America, but we must not lose sight of what is happening in the rest of the world. The region faces the challenge of maintaining and improving the economic momentum that it picked up in 2017 while remaining exposed to global financial volatility and some uncertainty regarding the rules of the game of world trade, including the revision of some emblematic treaties for the region such as the NAPHTHA. The presidential elections in Brazil, Mexico, Colombia, Venezuela and Paraguay will define new political scenarios that could determine the economic conduct of the countries. But beyond the media attention that these phenomena deserve, what is really at stake is the creation of a large consensus to increase productivity and generate policies that guarantee macroeconomic stability and deepen the social advances harvested in recent decades. In this pro-productivity agenda, cities can offer an important contribution.
The above article was written and published in Spanish and has been translated into English. Click here to read the original article.
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