By Amit Kapoor
One of the fastest-growing economies in the world, India has grown at a rate of above seven per cent over the last decade. Much of this growth can be explained by the growth of its cities. Cities have emerged as economic powerhouses that have defined job growth within the country.
While prosperity has increased in cities, so have the challenges they face. The challenges are of inequality, unplanned urbanisation, mass migration, poverty, unemployment and the like. Some cities have even witnessed a fall in their quality of life.
The challenges that our cities face can be maged if looked at from the lens of competitiveness.
Competitiveness depends on the long-term productivity of a region. A competitive city is a city that successfully facilitates its firms and industries to create jobs, raise productivity, and increase incomes of its citizens over time.
The City Competitiveness Report 2017 represents the competitive performance of 50 Indian cities on different parameters. It uses the framework of Michael Porter’s Diamond Model which defines competitiveness as the sum total of factor conditions, demand conditions, context for firm strategy and rivalry, and related and supporting industries.
Bengaluru has emerged as the most competitive city in India. Mumbai and Pune closely follow. Pat, on the other hand, has emerged as the least competitive city.
The alysis brings out some interesting insights. First, the population of a city has a direct bearing on its level of competitiveness, i.e., big Indian cities are also the most competitive. This suggests that either the population acts as an active resource (as a factor of production) and positively impacts the competitiveness of a city or that competitive cities tend to be more attractive to the general population.
The literacy rates in these cities are substantially higher than India’s tiol average. This, coupled with their high population densities, creates the best demand conditions in the country, thus adding to their competitiveness levels.
The presence of quality educatiol institutions in the big cities helps them attract the best talent from all over the country. This, coupled with job opportunities they offer, help them retain such talent. The presence of such diverse talent helps in sustaining the growth, productivity and economy of these cities. Sound fincial infrastructure and relatively higher fincial literacy levels further add to their competitiveness.
But a large population is not always a boon. It creates challenges pertaining to the movement of people and goods and in the provision of basic services. Governments respond to such problems by improving service delivery and spending on infrastructure. It is not a coincidence that all these cities have operatiol Metro rail networks and some of the best hospitals and airports in the country. These factors significantly impact the competitiveness of cities.
Secondly, prevailing environmental conditions impact the competitiveness of a city by affecting its labour productivity. While other big cities like Mumbai, Kolkata, Cheni and Hyderabad have maged to retain their competitiveness levels, Delhi has of late witnessed a drop in competitiveness mainly because of its worsening environmental landscape. A similar loss was also witnessed by the neighboring cities of Noida and Gurugram.
Thirdly, the level of industrialisation in a state impacts the competitiveness of its cities. In India, most of the highly competitive cities belong to a small group of industrialised states (including Maharashtra, Tamil du, Gujarat and Kartaka) while the least competitive cities belong to less industrialised states like Jharkhand, Bihar, Chhattisgarh and Jammu and Kashmir, among others. In other words, industrialisation as a policy tool is required to make cities from less industrialised states more competitive.
In the short run, some cities may witness substantial improvements in their competitiveness levels. This may be because of improvement in their factor conditions and demand conditions. But in order to sustain or further improve their competitiveness levels, they must act on the other two pillars of Porter’s Diamond model, i.e., context for strategy and rivalry, and related and supporting industries. It is worth noting that these two pillars are directly related to the level of industrialisation, which cannot be increased overnight. (IANS)