- Thursday, 27 October 2016 18:17
by Amer Zafar Durrani
The author is CEO of Reenergia and Secur Global, and a former World Bank Infrastructure Specialist
Smart cities are not created, but rather, they become smart on demand; and I think that this distinction is crucial. It is unwarranted to entertain the idea that one can create a smart city from scratch in the middle of nowhere - even if it is on a possible trade corridor, such as the China Pakistan Economic Corridor (CPEC). Purpose-built cities have short lives, as when its purpose fades, the city dies. Cities live because of their diversity of purposes - call them outputs - and unity of their ‘citizenry’ around social and economic security. Cities develop naturally; a city develops its ‘character’ which then characterises its demand and demand patterns. It is these demand patterns, their associated supplied services, and their clusters that are then supported by modern information and communication technology-enabled solutions. This creates a smart city.
I have been visiting China since 2004 and have personally witnessed the quality of its cities’ growth. The example of this growth that I often quote is that of Urumqi. In 2004 I went to China as part of a World Bank Group team. Flying from Islamabad, I stopped over at Urumqi and all I could see were Pathans (from Pakistan) carrying onion sacks across the airport parking lot -obviously the ‘commodity’ of favor, and of trade, that week! I recently visited Urumqi, again. This time I flew from Almaty to Urumqi, transiting in Urumqi onwards to Beijing; and what a change in a period of just 10 years! I saw that instead of one airport that used to open at seven in the morning, now Urumqi had 2 airports - one for local flights and one for international. In 2004 I could find only one real five-star hotel, and now there were a dozen of them! More significantly, it was the old and grown-up feel of the city that shocked me; the buses looked old, the roads looked beaten, there were large motorways all around town and I was wondering, was all this real, had all this growth happened and aged as fast as it really did. The whole city seemed to have emerged and grown old in a matter of only ten years. The pace of development that I saw was mind-boggling, and at the same time a bit saddening.
We need to think smartly about smart cities and how they come into being before I head straight into how possibly Gwadar, as a key node of the CPEC, could become a smart city. Talks of cities is inextricably linked with the question of urbanisation. In Pakistan, urbanisation is a burning issue but also one with which we are still to come to grips with. It is clear as broad daylight that Pakistan is a rapidly urbanising country, and that this is all good for us in the long term. I also see a lot of romanticism about the loss of rural life, but that is understood given that the passing away of one way of life and its replacement with another always makes the memory of the obsolescent better, happier, and, somehow, purer. The truth, however, is that mankind as a whole is inexorably urbanising at varying rates, which makes the “urban” the future, not only of Pakistan, but of the whole developing world. Professor Edward L. Glaeser, the Harvard University authority on urban and social economics, opines that to talk of a “poor urbanised country” and a “rich rural country” is a contradiction in terms. He states that per capita GDP growth is linked to urban development because international experience of growth reveals that on average, a 10 percent increase in the share of urban population will lead to 30 percent increase in per capita output. The correlation, and possibly even the causation, between urbanisation and wealth creation is striking, to say the least.
It should, therefore, not be a stretch to recognise that cities lie at the heart of development and growth. Moving on to Special Economic Zones - Special Economic Zones are linked to cities - so I postulate that a Special Economic Zone requires a city. This postulation merits enumeration of some global realities regarding the overwhelming global drive toward urbanisation. Almost half of the world's population live in cities. Only 600 cities in the world produce 60 percent of the global Gross Domestic Product. It is important to think about the densities of cities, and therefore about what creates all the din of growth and development within them. One of the cardinal functions served by cities is to bring people together in manifold purposive ways, but mainly centered on production and reproduction of our economic and social life, and our consciousness. Just the bringing together of people, is in itself, a critical and positive outcome of cities. Cities promote creative and aimed conviviality; and hence density plays a key role. In Pakistan today, we imagine a city, say, as Bahria Town, or as the Defence Housing Authority, that maroons people in islands of molecular or nuclear opulence spread out horizontally. The future of cities is vertical and dense, and not horizontal and sparse. A city has to be vertical and dense to perform its fundamental function of being a carrier of civilisation. So when you imagine a city, remember that it is all about bringing people together, and thereby bringing ideas together.
A city brings multiple services closer to each other to maximize proximity effects of services. The cities that we see progressing around the world have certain common characteristics, such as large concentrated markets, provision of diverse services, and massive production of social capital leading to a felt need for efficiencies and specialisation, which in turn leads to cluster formation and cluster competition. All this brings about innovation. A good local example of cluster competition would be the restaurants in the Kohsar Market in Islamabad. From having one restaurant once upon a time, it now has eight, all competing, and as a result, improving and adding to the overall universe of services and standards within which they operate. It is, therefore, important to ask ourselves why we need a smart city in the first place. It is a bit like asking ourselves why we need our kids to go to a great school and get an A grade. The answer, in the case of the first, as in that of second question, is to increase their chances of prosperous and successful existence by doing things in ways that are new, effective, and efficient. So yes, a smart city is an exponential likely promoter and creator of innovation - but first, it has to be a city.
According to Nicolas Colin (Co-Founder & Partner), The Family, three things produce innovation; the first is capital, the second is knowhow, and the third, rebellion. Rebellion means the courage and flair for thinking and acting differently, to explore other ways of doing things. So what happens in the city is that when all three come together, the overlap zone, of the three, is where innovation comes into being.
The city of Dubai houses about 200,000 people per square kilometer. I do not like to call it housing because yes, while this is what the formal phenomenon is, I prefer to call it bringing people together. You recall that I mentioned earlier that innovation takes place when people are brought together, so then, Dubai’s capacity for innovation is much greater than Pakistan’s, which on average manages only 6,000 people per square kilometer in its cities. This is a sub-optimal density for innovation.
Now, let us return to and think about smart cities - where we started. There are a lot of definitions that tell us what a smart city is. I choose to go by McKinsey’s definition because it is comprehensive. McKinsey’s definition says that a smart city is about taking a complex urban environment, using innovative technology solutions, and, thereby, sustainably managing your resources, your infrastructure and your services. I shall like to refer back to what I said earlier that no smart city is created; the city, in this definition, already exists and is complex.
Even if you take Dubai as a smart city, it did not start with the concept of a smart city. In fact, as Dubai grew and took on its particular character, it was that particular character that demanded that the government bring government, services, and infrastructure closer to the people. The government of the city of Dubai responded. It is also important to mention here, in the context of sustainable management, that research tells us that very large cities, megacities, do not become smart as easily as medium-sized cities. So, for instance, it is easier for Brussels to ‘become smart’ than it is for, say, New York to ‘become smart’. I mention this only to prevent us from going to the other extreme of thinking of only big as smart and small as dumb.
What it boils down to is that on the one hand you do not create smart cities, and, on the other, you do not take a city like Karachi, and say, we are going to make it smart. A more appropriate approach would be to apply your smart city enthusiasm to, say, Faisalabad or Sialkot. I personally think these two cities would be perfect smart city projects.
I shall now like to deal with the correlation between China Pakistan Economic Corridor, smart cities, and Special Economic Zones. I think it is in good order to talk about Special Economic Zones because they are extremely popular today in the development handbooks of policymakers of developing countries, and this predilection is based on how successful they have been in the Chinese model of development.
Special Economic Zones come in different shapes and specifications. The most important thing, as it appears to me, about them is that a Special Economic Zone is a ring-fenced experiment to allow freedoms, which otherwise will not be allowed in your country. Although running a successful Special Economic Zone may be taken as sign of good governance in a developing country, yet the paradoxical fact is that if we are all well governed, if we are all performing well, we would not need Special Economic Zones. This paradox, I believe, supports my contention that the Special Economic Zone is established to introduce things which do not exist in the economy and the economic governance of a country; and usually end up destroying the social fabric of a country - take the example of Tunisia. But, for now, we will stay with China; China started Special Economic Zones to basically allow itself an experiment in market economy and that is why Special Economic Zones worked in China, because the market economy was non-existent in China and its calibrated introduction worked. Current research shows that more SEZs or Free Economic Zones (FEZs) have been more unsuccessful than successful around the world. But they have worked in China. In 2007, SEZs and all related development zones were contributing at least 33 percent of the national high-tech output in China. The situation today under the “New Normal” in China is different, where SEZs are struggling.
So the answer to the question, “what is SEZ?”, is that it is a border within a border. Through SEZs, you create a ring-fenced economic opportunity, you effect social ring fencing, and you create institutional ring fencing at the same time that public and private roles are changed from what they are and how they are enforced in the rest of the country. Just remember my simple formula for building smart cities: no city, no SEZ, no creativity!
You create the city first and then you create the SEZ later, because SEZs need human capital and human capital are attracted to cities. Talented people would not take the unreasonable risk of going to the back of beyond where their children cannot go to great schools, where they would not be safe, where there will be no networking opportunities, in short, where there would not be an exciting urban environment to work, live, and enjoy. The idea that a SEZ along CPEC is going to be created just out of the blue, is only a glamorous idea which glitters more than it delivers. However, it is possible to create a city that has an attached SEZ, and this can be done the Dubai way, or the Shenzhen way. Whatever model we use, we have to remember that high-quality human capital is attracted to more vibrant cities. Even if you go today to Karachi, despite the insecurity, it is the most vibrant city in Pakistan. So the idea is that when better human capital is present, the three Ts of Richard Florida - talent, technology and tolerance, and I added a fourth one, that is, transport - would come together to make a city that is joyously livable attracting great human capital to itself.
Now, something about Gwadar’s development. In this context, we need to think about the concept of aerotropolis. It is, basically, a theory that posits the fact that in the 21st century it is the airport-driven metropolis, just like we had the railroad-driven metropolis in the 19th century and roads-driven one in the 20th century. The question that comes to mind is, “Is our government being very old-fashioned that it has not taken advantage of this new paradigm simply because we are still fascinated by roads and railways and our policy imagination fails to fly and is gravity-bound?”. It is not that they are not important but that there are other things that need to be integrated into our development thinking and become prominent features thereof. For instance, look at Dubai; the airport there went up before the roads were laid down and it is a perfect example of an aerotropolis. The whole metropolitan hub of Dubai is built around an airport. Only last year, Dubai handled more than 75 million passengers - one of the busiest in the world.
Now, let us discuss Gwadar briefly. We keep telling ourselves that Gwadar’s rise is just a matter of time. It is perpetually pushed into the hazy and cozy mists of near future that itself keeps moving forward relentlessly like a mirage in the desert. Gwadar was a dream that we dreamed 30 years ago, and we have been sticking to that dream, or that dream has been cleaving to us. But the fact of the matter is that we were not able to make that dream a reality. Now the world has moved ahead and we are hanging to our dream, unable to dream a new dream. If we want to build Gwadar today, then we need to dream a new dream. We are uncertain as to what is the Gwadar that we want for ourselves and for the world. I doubt the port of Gwadar is going to drive its development. The Gwadar of our dreams 30 years ago did not have Dubai and Chabahar in our minds, because they were not forces to be reckoned with when we started talking of Gwadar. Today, they are powerful regional and global realities with a whole lot of things going for them. The petro-argument was and is used to inflate our Gwadar dream. We say that a fifth of the world’s oil passes through the Straits of Hormuz and we are sitting right at the mouth of it, but this argument is only an armchair argument. We are not doing anything at all even to benefit from this. As global oil dependence goes down, so will our dream. We also have other ports, but we are not able to drive them any better.
Now, if we are going to do an SEZ on the CPEC, we only need to do one SEZ and do it right and that would be enough for Pakistan. So what do I mean by doing it right? I think we need to follow Aqaba and Shenzhen. Take Aqaba port and SEZ in Jordan, I always contrast it with Chabahar; they both were conceived at the same time, but are at very different stages in their lives. The Jordanian government has made Aqaba work through sound planning and foundations, and proactive course correction. Chabahar, on the other hand, like Gwadar, has not worked so far. Both are prey to regional geopolitical spillovers and the inertia of inter-state and intra-state relations. I think it is important to understand that the whole idea that seaport operationalisation will change the city and that it will start becoming the center and hub of trade is probably wrong.
We need to move people before we can move goods. We need to concentrate on airports and airborne travel. We need to connect people who would do deals, different kinds of deals, which would then create the need for roads, seaports and all. What we are missing in our entire discussion of CPEC is people-centric thinking, because the all-important question is who we are going to build Gwadar for.
Even when we utter words like people-centric, I doubt if we truly understand their meaning. Gwadar has to cater to the people of Balochistan; it has to put these citizens of Pakistan right at the center of the national and Gwadar’s paradigm of development. Remember Dubai works because it caters to the people of Dubai; they are the first citizens there, everybody else comes second. Dubai is focused on giving employment to its own local population first and foremost. Likewise, we should develop a model that is built around jobs because that is the model that will allow sustainability and make a smart city out of Gwadar and its Special Economic Zone.