Special Issue: Cities in the 21st century: A view from the developing world

Castells-Quintana, David (Ed.); Herrera-Idarraga, Paula (Ed.) Periodical Part Special Issue: Cities in the 21st century: A view from the developing world REGION Provided in Cooperation with: European Regional Science Association (ERSA) Suggested Citation: Castells-Quintana, David (Ed.); Herrera-Idarraga, Paula (Ed.) (2019) : Special Issue: Cities in the 21st century: A view from the developing world, REGION, ISSN 2409-5370, European Regional Science Association (ERSA), Louvain-la-Neuve, Vol. 6, Iss. 2, https://openjournals.wu.ac.at/ojs/index.php/region/issue/view/19 This Version is available at: https://hdl.handle.net/10419/235841 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc/4.0 Volume 6, Number 2, 2019 Cities in the 21st century: A view from the developing world Special Issue edited by David Castells-Quintana and Paula Herrera-Id´arraga Table of Contents Editorial Cities in the 21st century: A view from the developing world David Castells-Quintana, Paula Herrera-Id´arraga Articles An Overview of Urbanization in Ecuador under Functional Urban Area Definition Moises Obaco and Juan-Pablo D´ıaz-Sanchez Agglomeration economies and urban productivity Tania Torres-Gutierrez and Jessica Ordo˜nez Governance of metropolitan areas for delivery of public services in Latin America Alejandra Trejo-Nieto, Jos´e-Luis Ni˜no-Amezquita and Maria-Luisa Vasquez Market Access and the Concentration of Economic Activity in a System of Declining Cities Luis Quintero and Paula Restrepo This special issue on “Cities in the 21st century: A view from the developing world” is edited by David Castells-Quintana (Universidad Aut´onoma de Barcelona, Barcelona, Spain) and Paula Herrera-Id´arraga (Pontificia Universidad Javeriana, Bogot´a, Colombia). With the exception of the editorial, all contributions to this special issue have already been published in earlier issues of REGION, for the sake of immediate exposure of the content. •An Overview of Urbanization in Ecuador under Functional Urban Area Definition by Moises Obaco and Juan-Pablo D´ıaz-Sanchez was originally published in vol. 5, no. 3, 39–48. •Agglomeration economies and urban productivity by Tania Torres-Gutierrez and Jessica Ordo˜nez was originally published in vol. 6, no. 1, 17–24. •Governance of metropolitan areas for delivery of public services in Latin America by Alejandra Trejo-Nieto, Jos´e-Luis Ni˜no-Amezquita and Maria- Luisa Vasquez was originally published in vol. 5, no. 3, 49–73. •Market Access and the Concentration of Economic Activity in a System of Declining Cities by Luis Quintero and Paula Restrepo was originally published in vol. 5, no. 3, 97–109. REGION, The journal of ERSA / Powered by WU ISSN: 2409-5370 ERSA: http://www.ersa.org WU: http://www.wu.ac.at All material published under the Creative Commons Licence Non-Commercial License 4.0 See http://creativecommons.org/licenses/by-nc/3.0/ for the full conditions of the license. The copyright of all the material published in REGION is with the authors Editorials Volume 6, Number 2, 2019, E1–E6 journal homepage: region.ersa.org DOI: 10.18335/region.v6i2.260 Cities in the 21st century: A view from the developing world David Castells-Quintana1, Paula Herrera-Id´arraga2 1Universidad Aut´onoma de Barcelona, Barcelona, Spain 2Pontificia Universidad Javeriana, Bogot´a, Colombia Received: 12 February 2019/Accepted: 13 February 2019 Abstract. In this (introductory) paper, we present i) some basic figures about the rise of cities in the developing world, and ii) the four papers of this special issue. This paper and the other four papers in the issue intend to bring the reality of cities of the developing world in the 21 st century to the frontline, hoping to motivate further and much needed research. JEL classification: O1, O4, R1 Key words: Cities, urbanisation, developing countries 1 Introduction Internal disparities within countries are sometimes as important, or even more, as international ones. Consequently, our capacity to influence people’s welfare depends on our understanding not only of international and national dynamics, but also of what happens between and within regions and cities. Accordingly, research on regional and urban economics has become fundamental for the design of sound policies aimed at increasing prosperity for all. In recent years and decades, research in the fields of regional and urban economics has gained momentum. This trend follows the reality of a new urban world: the percentage of the world population living in urban areas has increased from around 30 in 1950 to around 54 in 2015, and is expected to reach 66 by 2050 (United Nations 2015). But the focus of research has in most cases been put on the analysis of dynamics of the developed world. By contrast, our understanding of regional and urban dynamics in the developing world remains very limited. Developing countries will by 2030 host more than 85% of the world population, and more than 90% of the new urban residents of the world will live in cities in the developing world (United Nations 2015). The rise of cities in developing countries becomes evident by looking at some figures. Figure 1shows urbanisation across different income groups since 1960. In the 1960s, cities in low and lower-middle income countries concentrated between 12 and 20% of their total population, while the figure was 54% in high income countries. Since then, in low and lower-middle income countries urban population has grown by 174% and 125%, respectively. By contrast, in upper-middle and high income countries urban population has grown by 78% and 47%, respectively. Although, in the last two decades the pace E1 E2 D. Castells-Quintana, P. Herrera-Id´arraga Source: World Bank Data Figure 1: Urban population (% of total) has decelerated considerably in all countries, the process of urbanisation in developing countries continues to be strong. This rapid urbanisation worldwide implies an increase in the number as well as in the size of cities. Worldwide, the number of urban agglomerations of more than 300 thousand inhabitants has increased from 304 in 1950 to 1729 in 2015 1 . And the average size of these urban agglomerations has gone from 253 thousand inhabitants in 1950 to 1.268 million in 2015. While in 1950 around 300 million people in the world lived in urban agglomerations of more than 300 thousand inhabitants, this figure exceeds 2.2 billion in 2015, which is almost a third of the total world population, and 57% of the world urban population. And among all urban agglomerations, today the cities of more than 10 million inhabitants concentrate alone more than 12 per cent of the world urban population. This increase in the number and size of cities has been specially marked in the developing world. In 1975, there were 178 large cities – those with more than one million inhabitants – and 9 megacities – those with more than 10 million inhabitants – in developing countries 2 . In 2015, only a generation after, the number of large cities in developing countries reached 396 (of 494 worldwide), and the number of megacities reached 26 (of 32 worldwide). Twelve of these megacities of the developing world already have more than 20 million inhabitants 3 . In terms of size, 17 out of the top 20 countries with higher average city size are developing countries. The role of large cities in developing countries is also clear when we look at primate cities (i.e., the largest city in each country). Primate cities in developing countries are, on average, larger than their counterparts in developed countries: in 2010, primate cities in developing countries had on average 3.4 million inhabitants, one million more than their developed counterparts. In developing countries, these cities also concentrate a larger percentage of the urban population. On average, while in developed countries the population in the largest city is nowadays around 35% of the urban population, in the developing world the figure is 43%. For low income countries, as shown in Figure 2, the percentage of urban population living in the largest city is especially high, reaching 56% in 1980. However, since then the figure has decreased, suggesting that new or existing 1 Using World Urbanisation Prospects data (United Nations 2015), and considering urban agglomerations that had at least 300 thousand inhabitants in 1990. 2 Acknowledging the potential limitations of UN data in what refers to the size of large cities, in these figures we rely on novel data by the Urban Platform of the European Commission. Data refers to “urban areas”. 3 Being Guangzhou, Cairo, Jakarta, Delhi and Calcutta being the 5 largest. In the developed world, only Tokyo has more than 20 million inhabitants. REGION : Volume 6, Number 2, 2019 D. Castells-Quintana, P. Herrera-Id´arraga E3 Source: World Bank Data Figure 2: Population in the largest city (% of urban population) cities beyond the primate city are gaining importance in the last decades in low-income countries. While this rapid urbanisation and city growth comes with great opportunities, in the form of agglomeration economies (Duranton 2016), it also represents great challenges for sustainable development. Urban residents in developing countries currently face great deficiencies in terms of access to basic services, like access to water, sanitation facilities and electricity (see for instance Graham 2010,Castells-Quintana 2017a,b). As an example, Figure 3displays the percentage of urban population that has access to electricity. Low income countries still face a huge deficiency in this crucial aspect, which could mean barriers to take advantage of the benefits of urbanisation. Low income countries, and to some extent most developing countries, also face high levels of urban segregation and inequality (Sabatini 2006,L´opez-Morales et al. 2016), and high levels of informality (see for instance Perry et al. 2007,Herrera-Id´arraga et al. 2016,Garc´ıa 2017,Garc´ıa, Badillo 2018), among other problems. Our understanding of how these problems evolve, and therefore our capacity to address them, is still very limited. What becomes evident is that urban patterns have become a key element if we are to understand, and properly address, some of the greatest challenges that developing countries are facing in the 21 st century. With this purpose in mind, we have put together this special issue on cities in the 21 st century, with a focus on the developing world 4 . In the next section of this introductory paper we present and connect the four papers in the special issue. 2 The special issue The rest of this special issue is composed of four papers. They all study aspects of the reality of developing countries in the 21 st century, always from a spatial perspective. Each paper focuses on a different topic, but they nicely complement each other. Likewise, while three papers focus on Latin America and the fourth one on the reality of Eastern Europe and Central Asia, they all have broader implications for the developing world in general. Moreover, by taking a close look at specific cases, these papers provide interesting insights into the developing world, too often missing in the urban and regional economics literature. In this section, we briefly discuss each of these four papers. 4 This special issue was born as an outcome of the PUJ/Banrep: First Workshop in Urban and Regional Economics, held in the Pontificia Universidad Javeriana, in Bogot´a in June 2017, where more than 40 papers were presented and discussed. REGION : Volume 6, Number 2, 2019 E4 D. Castells-Quintana, P. Herrera-Id´arraga Source: World Bank Data Figure 3: Access to electricity (% of urban population) Obaco, M. and D´ıaz-S´anchez, J. P. (2018) “An Overview of Urbanization in Ecuador under Functional Urban Area Definition”, REGION, 5(3), pp. 39-48. Defining urban areas, in a consistent and comparable way, is a challenging task. In developing countries, almost by definition, urban areas are changing constantly and rapidly. Understanding how urban areas grow is fundamental for policy makers, for instance in what refers to the planning of infrastructure and the design of sound socioeconomic policies. In developed countries, efforts have been put forward to better and more consistently define urban areas. The OECD has defined metropolitan areas using a functional approach based on labour markets and commuting patterns: Functional Urban Areas- FUAs (OECD 2012). In developing countries these efforts have been much more limited. Moises Obaco and Juan-Pablo D´ıaz-Sanchez (2018) are up to the challenge. They look at urbanisation in Ecuador for more than half a century. Using census data, they reassess the level of urbanisation considering the idea of functional urban areas. They show how urban population in Ecuador today, as probably in many other developing countries, is mainly concentrated in FUA of metropolitan size above 1.5 million inhabitants. Torres Gutierrez, T. and Ord´o˜nez, J. (2019) “Agglomeration economies and urban productivity”, REGION, 6(1), pp. 17-24. In their paper, Tania Torres-Gutierrez and Jessica Ordo˜nez (2019), also focusing on Ecuador, look at how agglomeration economies have acted to enhance industrial productivity. They do this using census data and studying the evolution of the urban rates and their connection with labour productivity at the municipality level during the last 2 decades of the 20th century and the first one of the 21 st . Their study provides evidence on how, under the adequate conditions, urbanisation can be a force for higher productivity in developing countries, as it also has traditionally been in developed countries. However, their results also warn about the risks of congestion in urban areas when urban density becomes too high, something in line with recent papers in the urban economics literature. Trejo Nieto, A., Ni˜no Amezquita, J. and Vasquez, M. (2018) “Governance of metropolitan areas for delivery of public services in Latin America”, REGION, 5(3), pp. 49-73. As shown by the previous two papers, increasing urbanisation in developing countries can lead to larger urban areas, and this brings with it potential benefits in the form REGION : Volume 6, Number 2, 2019 M. A. Obaco, J. P. D´ıaz-S´anchez 41 (1986), among others, systematized this procedure by developing algorithms that are widely used in many countries and regions in which the idea is to have a minimum of self-containment of commuting flow within the LLMs (Casado-D´ıaz, Coombes 2011). However, the international comparability and the collection of statistical data are general problems as most countries use different conceptions to define their metropolitan areas. One of the most ambitious efforts of the Organization for Economic Cooperation and Development (OECD), jointly with the European Commission, is the identification and standardization of the economic urban areas labelled as Functional Urban Areas (FUAs). This methodology identifies 1,251 FUAs of different sizes in more than 31 countries, which produced the OECD metropolitan dataset, which considers close to 300 cities with populations of 500,000 inhabitants or more. Currently, many researchers prefer the use of FUAs to perform economic analyses (OECD 2013,2016,Schmidheiny, Suedekum 2015,Veneri 2016,2017) instead of simply geographical delimitations. 1 For example, Veneri (2016) finds a better fitting model for the zip’s law using FUAs rather than the administrative boundaries given by the countries, and Veneri (2017) analyzes the urban spatial structure of the FUAs across the world and find that there is an increasing trend in the decentralization of the urban areas. Moreover, Ahrend et al. (2017) and Matano et al. (2018) analyze agglomeration effects on labor productivity using FUAs as units of analysis. In detail, FUAs involve three identification steps (OECD 2013). First, it explores the population density of the country, looking for grid cells of high population density (grid cells with a minimum of 1,000 or 1,500 inhabitants – set by the researcher – per km2). Next, it identifies clusters of grid cells of high population density. Those clusters should contain a minimum of 50,000 or 100,000 inhabitants to be considered an urban core, depending on the country. These urban cores allow the identification of the municipality of reference (head of the FUAs). However, a minimum of 50% of the population must be contained in the urban core. In the second step, those urban centers are connected as part of one FUA if two urban cores share at least a minimum commuting flow (15%). 2 In a third step, the hinterland is identified, which includes all the surrounded areas that are not urban areas but connected to the urban cores through a minimum commuting flow as well. The minimum is the same that has been applied in the second step. The OECD concept of FUAs has also been extended to those countries that are not OECD members because generally they do not account for their own economic definition of urban areas. In this case, the FUAs allow to compare, to evaluate, and to elaborate recommendations of public policies and urbanization around the world. However, the lack of adequate data to elaborate the FUAs is a main barrier in these countries. For example, in China (OECD 2015), the very same OECD modifies the FUAs methodology to take advantage of the available information or characteristics of the country. In this case, a different minimum threshold to identify urban cores is applied (550 inhabitants per km2) as this country is not densely populated across the territory. To connect urban cores and determine the hinterland, it is applied a decay function of the expected commuting zone. Similarly, Obaco et al. (2017) present a different methodology to identify FUAs where there is not commuting data. The approach is based on a varying travel time to connect urban cores and determine the hinterland of each FUA. The final coverage of the travel time will depend on the geographical extension of the urban cores because it is shown that larger urban cores have on average more influence zones. However, this model needs a calibration of the parameters to apply the varying travel time model. The model is based on the estimated parameters from Colombia (For more detail, see Obaco et al. 2017). Then, the model is applied in Ecuador. Following this work, and the simplicity of the model to identify FUAs, the OECD has used the same travel time approach to identify FUAs in other developing countries such as Morocco and Viet Nam (OECD 2018). However, the FUAs identified in Ecuador have not been explored and have not been compared with the international OECD database. In this work, we cover this gap. 1 For more information and list of countries, see http://www.oecd.org/cfe/regional-policy/functionalurbanareasbycountry.htm 2 Polycentric FUAs is where there are two or more urban cores within the FUA. In many European countries the minimum commuting flows applied might reach up to 50% (OECD 2012). REGION : Volume 5, Number 3, 2018 42 M. A. Obaco, J. P. D´ıaz-S´anchez Source: INEC-Ecuador, Administrative boundaries based on the year 2010 Notes: Elaboration by the authors Figure 1: Ecuador 3 Urban definition in Ecuador Ecuador is a small developing open economy. It lies on northwest coast of South America. It limits with Colombia at the north, Peru at the east and south, and the Pacific Ocean at the west (see panel A of Figure 1). Ecuador has an area of 283,561 km2 and it is formed by four natural regions: The Coast, the Highlands, the Amazon and the Galapagos Islands. Administrative division of Ecuador is based on three levels. From higher to lower: provinces (25), cantons (224), and parishes (1,024), (see panel B of Figure 1) 3 . Provinces are the most aggregated administrative division; meanwhile parishes are the closest to the conceptualization of municipality. Ecuadorian authorities consider urban areas as inhabitants living in the head of each canton, otherwise they are rural areas. Thus, this characterization of urban does not consider peripheral population beyond the head of the cantons. In terms of population, Ecuador has about 17 million inhabitants in 2018. In terms of ethnicity composition, Ecuador has a variety of self-identification ethnic groups such as mestizo (majoritarian), indigenous, white, black, and others. As for the urbanization, it is considered that Ecuador has faced a rapid urbanization process since 1960 (Villacis, Carrillo 2012). The current urbanization rate is about 65%, being lower than the average of Latin America around 70%. However, Ecuadorian urbanization process is characterized by extreme poverty. It is estimated that around 35% of the urban population in Ecuador lived in slums in 2014 (UN 2015). Considering the Ecuadorian authority definition of urban as a starting point, most of the population is concentrated in two urban parishes: Guayaquil, which is in the Coast, and Quito, which is in the Highlands. According to the 2010 census, these two cities have 27% of the total population, and the 35% of the total urban population; thus, these two urban areas could be considered as metropolitan cities, however only Quito has this category4. 4 FUAs identification in Ecuador As it was mentioned, the urban identification in Ecuador does not follow international standards of urban areas. Thus, we cannot determine the total number of cities existing in Ecuador. We focus only in the FUAs identification to explore urbanization in Ecuador. We use the FUAs identification made by Obaco et al. (2017) 5 . These authors used 3Numbers of administrative divisions according to the 2010 census of population and dwelling. 4 According to the 2010 census, the four most populated cities are Guayaquil has 2,291,158 inhabitants, Quito has 1,619,146, Cuenca has 331,888 and Santo Domingo has 305,632 inhabitants. 5For further detail, see Obaco et al. (2017). REGION : Volume 5, Number 3, 2018 M. A. Obaco, J. P. D´ıaz-S´anchez 43 satellite imagery of LandScan data to identify population density and travel time using the road network system of Google maps and Open Street Maps to cover the connection between urban cores and the hinterlands. Data used for the identification is between 2010 and 2014. The novelty of this approach is provided by allowing varying of the travel time according to the parameters of expansion that are calculated on the geographical extension of the urban cores. The parameters for the travel time model are based on the commuting flows of Colombia. Then, it is applied in Ecuador. The preferred identification of FUAs is determined by which allows to verification of more urban cores across the country. As Ecuador is not a densely populated country, authors analyze the 28 FUAs that were identified under a minimum threshold of 500 inhabitants or more per squared kilometer and 25,000 inhabitants in order to be considered as an urban core. The 28 FUAs allow to have representative urban cores in the Amazon (not highly populated region). They are composed by 34 urban cores in Ecuador, allowing for some polycentricity structure. If the thresholds were increased to the minimum applied by the OECD (1,000 inhab. and 50,000 inhab. to be an urban core), 20 urban cores could be identified with a total of 20 FUAs. Thus, we present the main analysis using the 28 FUAs. Moreover, results do not change when the 20 FUAs are analyzed as they are mostly small sized. Thus, the model was validated on sensibility test and robustness checks. Figure 2shows the 28 identified FUAs in Ecuador. The Ecuadorian FUAs system is majorly dominated by small FUAs. The two FUAs of metropolitan size are Guayaquil and Quito. There are 11 FUAs in the Coastal region, 13 in the Highlands, and 4 in the Amazon. Thus, we have a sample that covers urbanization even in the less populated zones of Ecuador. In Galapagos, the population density is much lower than in the Amazon, thus the Galapagos Islands are not included in the final list of FUAs. The Ecuadorian FUAs show the heterogeneous composition in terms of administrative boundaries because they are very small in the Highland, and large in Coastal and Amazon regions. However, the administrative boundaries are relatively large compared with the urban core extension in most of the cases. The FUAs cover around 7% of the total country extension and the two metropolitan areas around 3% of the total country’s extension. 5 Data We use information from the Ecuadorian censuses in order to explore the urbanization process over time. The first census was in 1950. The historical population comes from the National Institute of Statistical and Census (INEC) 6 . To compare the FUAs of Ecuador with the international OECD dataset, we divide the OECD’s FUA in four groups: OECD, Europe, Colombia and Ecuador. 6 Urbanization in Ecuador Figure 3shows the total FUAs population according to their respective Ecuadorian censuses. The number of people living in FUAs has rapidly increased between 1950 and 2010. In 1950, the total FUAs population was around 40% of the total population, being mostly settled in the rural area. In 1972, the population living in FUAs reached around 50% of the total; and, in 1990, the population living in FUAs reached 60%. For 2010, the total population living in FUAs is around 63%. Thus, the highest increase in the urban population is presented from 1962 to 1982, around 0.77% per year. Table 1shows the average of the FUAs size distribution of the 28 FUAs according to the information gathered in the censuses. In 1950, the FUAs size distribution was below 0.5 million, composed of 26 FUAs below 0.2 million and 2 FUAs between 0.2 and 0.5 million. In 1990, the first FUAs of large metropolitan size appear, with one FUA between 0.5 and 1.5 million, 3 FUAs between 0.2 and 0.5 million, and 23 FUAs below 0.2 million. In 2010, the distribution was: 2 FUAs larger than 1.5 million, no FUAs between 0.5 and 6 The data from Ecuador is available at http://www.ecuadorencifras.gob.ec/banco-de-informacion/. Moreover, we assume that the geographical extension of the FUAs identified through the period 2014-2010 are the same and fixed over time, because there is not information of the historical boundaries of the parishes over the time. The OECD database is available at http://www.oecd.org/cfe/regional-policy/- functionalurbanareasbycountry.htm. REGION : Volume 5, Number 3, 2018 44 M. A. Obaco, J. P. D´ıaz-S´anchez Source: INEC-Ecuador, and Obaco et al. (2017). Administrative boundaries and population based on the year 2010-2014 Notes: Elaboration by the authors Figure 2: FUAs in Ecuador Source: INEC, Ecuador Notes: Elaboration by the authors Figure 3: Population living in the FUAs REGION : Volume 5, Number 3, 2018 M. A. Obaco, J. P. D´ıaz-S´anchez 45 Table 1: FUAs size distribution in Ecuador (Average size) FUAs 1950 1962 1974 1982 FUAs greater than 1.5 M FUAs between 0.5 and 1.5 M 544,506 812,374 1,173,644 FUAs between 0.2 and 0.5 M 292,986 458,255 253,454 FUAs less than 0.2 M 28,577 42,476 65,218 79,505 no FUAs 1,873,765 2,368,872 3,201,281 3,472,337 Total Population 3,202,757 4,476,007 6,521,710 8,060,712 FUAs 1990 2001 2010 FUAs greater than 1.5 M 1,611,884 2,028,966 2,436,027 FUAs between 0.5 and 1.5 M 1,376,630 FUAs between 0.2 and 0.5 M 245,632 284,534 291,813 FUAs less than 0.2 M 80,529 91,241 86,048 no FUAs 4,070,608 4,566,649 5,316,535 Total Population 9,648,189 12,156,608 14,483,499 Source: INEC, Ecuador Notes: Elaboration by the authors 1.5 million, 10 FUAs between 0.2 and 0.5 million, and the remaining (16 FUAs) were below 0.2 million. Figure 4presents the average of the urban primacy of the FUAs in Ecuador for the period 1950-2010. We can observe the primacy of the two largest FUAs, Guayaquil and Quito during the whole period of time. However, in the most recent decades, the urban population has been mainly driven by the small FUAs, while the largest cities have grown slowly. For example, from 1962-1982, the largest urban population change was experienced in the Amazon and Coastal cities. 7 The international context Figure 5shows the composition of the Ecuadorian FUAs system and a comparison to OECD countries, Europe, and Colombia in the year 2014. The comparison to Colombia is relatively important because Ecuador and Colombia share borders 7 . 53 FUAs were identified in Colombia. As we can see, both systems are quite homogeneous. The Ecuadorian urban structure is still growing, and this growth is based on the small and medium sized FUAs (lower than half million inhabitants). If we compare the FUAs in Ecuador identified with the minimum threshold applied by the OECD, the same structure of these FUAs is based on the small FUA size. Additionally, a weak composition of metropolitan size (between 0.5 and 1.5 million inhabitants) is observed. Clearly, Ecuadorian FUAs structure follows the international pattern. Europe is the exception since it has a more diverse composition. Furthermore, like Ecuador, Colombia has larger administrative boundaries compared with the real extensions of the urban cores. Figure 6shows the share of population contained in the FUAs of metropolitan size with respect to the total population by country. When the FUAs of metropolitan size (Guayaquil and Quito) in Ecuador are compared with 290 FUAs of metropolitan size of 32 countries, the Ecuadorian metropolitan areas are below the global average, and even below their Latin America partners (Colombia, Chile, and Mexico) 8 . The same results are obtained when we compared with the 20 FUAs of different threshold. 7 The Latin America sample of FUAs considers Mexico, Chile, and Colombia. We use this year because the FUAs of Ecuador and Colombia have full information for this year. The OECD sample does not present information either for the FUAs of Ecuador and Colombia. 8 Information of the FUAs was gathered from https://measuringurban.oecd.org/#story=0, the Information of Ecuador was taken from Obaco et al. (2017). Information about Turkey and China are not REGION : Volume 5, Number 3, 2018 46 M. A. Obaco, J. P. D´ıaz-S´anchez Source: INEC, Ecuador Notes: Elaboration by the authors Figure 4: Ecuadorian Urban Primacy Structure (average of all censuses) Source: Information taken from OECD and INEC, Ecuador Notes: Elaboration by the authors Figure 5: FUAs size classification in the year 2014 8 Conclusions This work presents the urbanization process of Ecuador using the concept of Functional Urban Area and also compares with the international context. As for the urbanization in Ecuador, we part for two main considerations. First, the Ecuadorian official definition of urban, which is basically the population living in the head of the canton, does not approach an international conceptualization of urban areas nor FUAs. Second, the lack of commuting data does not allow application of any standard functional delimitation of urban areas in this country. These two important facts are limitations for and adequate planning of urban areas. Later, we analyze 28 FUAs identified in Ecuador. Most FUAs are small size, one of medium size, and two of large metropolitan sizes in Ecuador. The largest increase of the urban population was during the period of 1962-1982. Additionally, the two largest cities, Guayaquil and Quito, remain larger over time, although the urban growth is mainly driven by the small FUAs in the last decades. This is important because it could show some trend to the decentralization of the urban system. Next, we compare the data of Ecuador with the international database of the OECD. The FUAs of Ecuador also follow the composition of the urban structure of Colombia available yet. REGION : Volume 5, Number 3, 2018 M. A. Obaco, J. P. D´ıaz-S´anchez 47 Source: Information taken from OECD and INEC, Ecuador Notes: Elaboration by the authors Figure 6: Share of metropolitan areas in overall population in the year 2014 and the whole sample of the OECD composed mainly of small FUAs size. Moreover, the largest two Ecuadorian cities are below the average of the metropolitan FUAs of the OECD. Finally, we highlight the importance of standardizing the concept of urban areas to give a better comparison among countries. In this line, the OECD presents an important advance in the collection of data shown in this work. References Adams JS, VanDrasek BJ, Phillips EG (1999) Metropolitan area definition in the United States. Urban Geography 20[8]: 695–726. CrossRef. Ahrend R, Farchy E, Kaplanis I, Lembcke A (2017) What makes cities more productive? Evidence from five OECD countries on the role of urban governance. Journal of Regional Science 57[3]: 385–410. CrossRef. Brezzi M, Piacentini M, Sanchez-Serra D (2012) Measuring metropolitan areas: A comparative approach in OECD countries. In: Fern´andez Bazquez E, Rubiera Morell´on F (eds), Defining the Spatial Scale in Modern Regional Analysis: New Challenges from Data at Local Level. Advances in Spatial Science, Springer, 71-89. CrossRef. Casado-D´ıaz JM, Coombes M (2011) The delineation of 21st century local labour market areas: A critical review and a research agenda. Bolet´ın de la Asociaci´on de Ge´ografos Espa˜noles 57: 7–32 Coombes MG, Green AE, Openshaw S (1986) An efficient algorithm to generate official statistical reporting areas: The case of the 1984 travel-to-work areas revision in Britain. Journal of the Operational Research Society 37: 943–953. CrossRef. Duranton G (2015) A proposal to delineate metropolitan areas in Colombia. Desarrollo y Sociedad 75: 223–264. CrossRef. Ferreira JA, Condessa B, Castro e Almeida J, Pinto P (2010) Urban settlements delimitation in low-density areas. An application to the municipality of Tomar (Portugal). Landscape and Urban Planning 97[3]. CrossRef. REGION : Volume 5, Number 3, 2018 48 M. A. Obaco, J. P. D´ıaz-S´anchez Fox KA, Kumar TK (1965) The functional economic area: Delineation and implications for economic analysis and policy. Papers and Proceedings of the Regional Science Association 15: 57–85. CrossRef. Glaeser EL, Henderson JV (2017) Urban economics for the developing world: An introduction. Journal of Urban Economics 98[1]: 1–5. CrossRef. Matano A, Obaco M, Royuela V (2018) What drives the spatial wage premium for formal and informal workers? The case of Ecuador. AQR-IREA working paper (6): 35 Obaco M, Royuela V, V´ıtores X (2017) Computing functional urban areas using a hierarchical travel time approach: An applied case in Ecuador. AQR-IREA working paper (5): 46 OECD – Organization of Economic Cooperation and Development (2012) Redefining urban: A new way to measure metropolitan areas. OECD Publishing, Paris OECD – Organization of Economic Cooperation and Development (2013) Definition of functional urban areas (FUA) for the OECD metropolitan database. OECD Publishing, Paris OECD – Organization of Economic Cooperation and Development (2015) OECD urban policy reviews: China. OECD Publishing, Paris OECD – Organization of Economic Cooperation and Development (2016) Making cities work for all. Data and actions for inclusive growth. OECD Publishing, Paris OECD – Organization of Economic Cooperation and Development (2018) OECD urban policy reviews: VietNam. OECD Publishing, Paris Pesaresi M, Melchiorri M, Siragusa A, Kemper T (2016) Atlas of the human planet 2016: Mapping human presence on earth, with the global human settlement layer. European Commission, EUR – Scientific and Technical Research Reports Puderer H (2008) Defining and measuring metropolitan areas: A comparison between Canada and the United States geography. Geography working paper series defining, 92, 1-12 Schmidheiny K, Suedekum J (2015) The pan-European population distribution across consistently defined functional urban areas. Economics Letters 133: 10–13. CrossRef. UN – United Nations (2015) World urbanization prospects: The 2014 revision. Department of Economic and Social Affairs, Population Division, (ST/ESA/SER.A/366) Veneri P (2016) City size distribution across the OECD: Does the definition of cities matter? Computers, Environment and Urban Systems 59: 86–94. CrossRef. Veneri P (2017) Urban spatial structure in OECD cities: Is urban population decentralising or clustering? Papers in Regional Science.CrossRef. Villacis B, Carrillo D (2012) Estad´ıstica Demogr´afica en el Ecuador: Diagn´ostico y Propuestas. Instituto Nacional de Estad´ıstica y Censos (INEC) Quito, Ecuador c 2018 by the authors. Licensee: REGION – The Journal of ERSA, European Regional Science Association, Louvain-la-Neuve, Belgium. This article is distributed under the terms and conditions of the Creative Commons Attribution, Non-Commercial (CC BY NC) license (http://creativecommons.org/licenses/by-nc/4.0/). REGION : Volume 5, Number 3, 2018 Volume 6, Number 1, 2019, 17–24 journal homepage: region.ersa.org DOI: 10.18335/region.v5i3.242 Agglomeration economies and urban productivity Tania Torres-Guti´errez1, Jessica Ord´o˜nez1 1Universidad T´ecnica Particular de Loja, Loja, Ecuador Received: 26 January 2018/Accepted: 21 November 2018 Abstract. This study explores the relationship between agglomeration economies and industrial productivity between 1980 and 2010 in Ecuador. The measure of productivity used is labor productivity. We conclude that urbanization economies have a positive impact on productivity in the period analyzed. These results are consistent with other works for developed and developing countries. JEL classification: R12 Key words: agglomeration, agglomeration economies, urban productivity, Ecuador 1 Introduction The increasing concentration of people and production produces benefits known as economies of agglomeration in the economic literature. Traditionally, agglomeration economies are classified in location economies and urbanization economies. From the seminal works of Glaeser et al. (1992) and Henderson et al. (1995), the ongoing debate is not only about the dichotomy between specialized and diversified environments within the same urban system, but also about the coexistence of specialization and diversity. Following Glaeser et al. (1992), location economies or MAR 1 externalities that operate within a specific industry restrict the flow of ideas to others, allowing the innovator to internalize externalities. Such interactions can positively influence the productivity of companies and the growth of cities. On the other hand, the urbanization of economies occurs through industries, which motivates the argument of Jacobs (1969) that the variety of industries within a geographical region promotes knowledge spillovers and results in innovative activities and economic growth. In this framework, the concepts of specialization and diversification are inherent to the economies of location and urbanization, respectively. The empirical literature establishes that spatial concentration of industrial activity improves economic growth, productivity, and innovation through different approaches, among which the common denominator is the analysis of the location-urbanization dichotomy. In line with this literature, this study explores the relationship between the economies of agglomeration and industrial productivity between 1980 and 2010, years for which census data exist for the economic activity of the country. There are two motivations for this work. First, to contrast the economic literature and the empirical results broadly focused in developed countries with those of a developing country like 1Refers to the model presented by Marshall (1890), Arrow (1962), and Romer (1986). 17 18 T. Torres-Guti´errez, J. Ord´o˜nez Source: Own elaboration based on INEC data Figure 1: Average annual growth of productivity in the cantons of Ecuador: 1980 – 2010 Ecuador. Second, to contribute to the orientation and reform of economic policies related to the productivity of the country, which seeks to reorient its strong agro-export sector. 2 Industrial dynamism: Diversity of the cantons of Ecuador The industrial sector is the second most important in terms of GDP in the Ecuadorian economy, but it is the most dynamic given that, unlike the other sectors, it has experienced 9% growth between 1980 and 2010 according to World Bank data. The services sector is the most relevant due to, among other things, the momentum generated in the eighties by exports and the oil boom that stimulated this sector, as well as that of the public administration. This is compounded by the significant growth in self-employed activities in the tertiary sector, whose participation in the national economically active population (EAP) in 1974 was 8.4%, 11.1% in 1982, and 28.5% in 2010. Finally, agriculture has fallen in its share of the national GDP by 6% in this period. As in other countries, economic activity tends to agglomerate in relatively few cities: Guayaquil and Quito mainly, those that from colonization maintain their supremacy over the others, and therefore perform important economic, regional, and international functions. Although these cities have altogether only 3.29% of the total surface area, they contain 16.25% and 15.48% of the population, they generate 23.61% and 25.19% of the gross added value, and represent 21.35% and 28.91% of manufacturing employment, respectively. Based on the information available for Ecuador at the industry and canton level, Figure 1shows the productivity growth in the analysis period for cantons whose increase is above the average annual growth rate of 4.2%. 3 Data and variables To determine if agglomeration economies affect productivity, we used data from the 1980 and 2010 Economic Census of the National Institute of Statistics and Censuses (INEC), at the level of each sector and canton or municipality, except for those corresponding to the Galapagos Islands. The empirical work included the homogenization of the databases prepared from the referred censuses because these were not directly comparable. In total, REGION : Volume 6, Number 1, 2019 Volume 5, Number 3, 2018, 49–73 journal homepage: region.ersa.org DOI: 10.18335/region.v5i3.224 Governance of metropolitan areas for delivery of public services in Latin America: the cases of Bogota, Lima and Mexico City Alejandra Berenice Trejo Nieto1, Jos´e Luis Ni˜no Amezquita2, Mar´ıa Luisa Vasquez3 1El Colegio de M´exico, Mexico City, Mexico 2CREPIB, Tunja, Colombia 3Independent consultant, Lima, Peru Received: 29 November 2017/Accepted: 16 October 2018 Abstract. One of the key issues at metropolitan level is the provision of public services and this paper highlights the importance of understanding the governance of public services in the context of increasing urbanization and decentralization. This paper provides a comparative analysis on metropolitan governance in Latin America by analysing specific case studies. The objective is to identify how the governance setting in metropolitan areas shapes the process and the results of providing public services to wider population. We examine metropolitan governance by employing a 3x3x3 model as a framework for addressing key issues about urban services delivery. Bogota, Lima and Mexico City are the metropolitan areas selected. Secondly, we focus on three sectors: transport, solid waste collection and water. Finally, the analysis focuses in three aspects of governance: coordination, financial sustainability and coverage and quality. The data collection process involved field research in Bogota, Lima and Mexico City. 1 Introduction The urban transition in Latin America throughout the twentieth century was relatively rapid, and the move to urban living continues at an accelerated pace in several countries in the region. One of the most striking recent features of urbanization in Latin America has been the emergence of metropolitan areas: cities that have surpassed the limits of their immediate outermost periphery, expanding beyond their administrative boundaries. In some cases, urbanization and urban expansion have led to the emergence of megacities that are national centers of economic or political power, such as Sao Paulo and Mexico City. Metropolitan areas face significant economic, social, political and environmental challenges that extend beyond the borders of local governments, including different administrative divisions across the territory. The provision of public services has become one of the most critical and pressing metropolitan concerns. While the theory and praxis of providing services in metropolitan areas have been subjects of great interest in advanced countries, they have been largely downplayed in low- and middle-income countries (Bahl 2013). Furthermore, some normative discussions about metropolitan areas in Latin America have focused on ideal government models, yet there is very little in the existing literature on the problems of providing public services at the metropolitan level. This paper highlights the importance of knowing and understanding how public services are provided in the context 49 50 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez of increasing metropolitanization and decentralization due to the hypothesized negative impact of politico-administrative fragmentation. According to some studies, fragmentation translates into weak governance, creating substantial difficulties in providing services. Despite this predominant assumption, the body of knowledge on the key governance challenges in metropolitan areas, especially in less developed countries, is not robust and lacks empirical work and comparative studies. This study contributes to the literature by implementing a comparative analysis of public service provision in metropolitan areas in Latin America. Our general research question refers to the characteristics and outcomes of governance for delivering public services in metropolitan areas, and how, in practice, governance schemes accommodate different contexts. More specifically, the paper deals with the following questions: What are the underlying characteristics of metropolitan governance and organization in Latin American countries? How do metropolitan areas organize the provision of public services? What is the performance of services delivery in terms of financial sustainability, coverage and quality? How do governance and outcomes vary across different services and metropolitan areas? We employed a 3x3x3 model of comparative analysis with three metropolitan areas (Bogota, Lima, and Mexico City), three services (public transport, solid waste collection, and piped water), and three aspects of governance (coverage and quality, financial sustainability, and coordination). Analyzing the provision of public services in different metropolitan areas in the Latin American region, we discuss how variation in metropolitan organization translates into specific outcomes across the selected cases. A variety of governance structures are identified, a few of which attempt to reverse some of the negative effects of jurisdictional fragmentation. The collected data includes secondary sources (statistics, reports, and documents), and field research in Bogota, Lima, and Mexico City, where a number of focus groups, interviews and technical visits took place. The paper includes a synthetic literature review, a description of the methodological design, an overview of the metropolitan organization and structures in the three selected areas, the research results and discussion. We conclude with a number of final remarks that can be useful for metropolitan level public policies. 2 Metropolitan Governance and Provision of Local Public Services Metropolitan areas are huge and complex urban areas whose functional scope extends beyond their jurisdictional boundaries. There is commonly political-administrative fragmentation, and policy implementation resides with individual autonomous local authorities. This is a challenge for urban planning, management and policy design. Because of their scale, complexity and fixed government structures, metropolitan areas conduct their planning and policy tasks in difficult environments. Metropolitan areas must provide services and infrastructure in sophisticated ways because the structure of land use is more diverse, the magnitude and complexity of expenditure is much greater, and the size and concentration of the population is larger than in other urban areas (Slack 2007). One of the key areas of public action at the metropolitan level is the provision of services. As metropolitan areas extend to multiple local jurisdictions, there is an increasing need to expand service provision to fulfill the population’s social needs. Inadequate provision of basic services translates into significant gaps between demand for and supply of urban services. Large intra-urban disparities can develop. Given the intricacy of metropolitan areas, governance plays an important role in the effective delivery of services. Governance defines the quantity and quality of services provided, their efficiency, and their equitable cost sharing (Jones et al. 2014,Slack 2007,Bird, Slack 2007). The long-standing debate on how to govern and manage metropolitan areas, whether via decentralized or consolidated structures, has been framed mostly in the theoretical discussion around government decentralization and its consequences for efficiency and equity (Bird, Slack 2007, p. 730). According to the subsidiarity principle, subnational levels of government achieve greater welfare gains by adjusting the provision of public goods and services to citizens’ preferences and local costs (Oates 1997). Decentralization favors accountability, and horizontal competition triggers a better supply of public REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 51 goods (Tiebout 1956). On the other hand, consolidation facilitates the exploitation of economies of scale, the management of externalities, and the quest for equity (Treisman 2000). Consolidation can also contribute to minimizing the dangers of elite capture and corruption, especially in developing countries (Prud’homme 1995). Echoing the principles above, the Public Choice School argues that decentralized metropolitan governments spur effective and efficient service delivery by promoting competition (Yaro, Ronderos 2011), whereas Regionalism and New Consolidationist supporters argue in favor of metropolitan governments (Lowery 2000). In practice a variety of metropolitan structures have been implemented, based either on the fragmented version or on different forms of government consolidation. Slack (2007) and Bird, Slack (2007), for instance, identify the one-tier fragmented model, the single-tier consolidated model, the two-tier model, and the one-tier model with voluntary cooperation. According to Storper (2014), fragmentation is an inevitable condition in metropolitan areas, and the regulation of the resulting interdependent relations in the absence of an overarching political authority is highly problematic. The enduring gaps between functional and administrative boundaries mean that there will always be governance problems at hand, and neither complete consolidation nor fragmentation is likely to resolve these fundamental metropolitan issues. Rather than a single government, metropolitan areas require structures of governance that are sufficiently open to allow for diverse solutions in an environment characterized by variable conditions (Parks, Oakerson 1989). Following Parks, Oakerson (1989), jurisdictionally fragmented metropolitan areas are complexly organized. However, organizational diversity and complexity do not necessarily imply institutional failure and can in fact lead to higher efficiency. By means of agreements and associations, local governments, civil society, and the private sector acting together in a coordinated manner can achieve acceptable governance structures (Feiock 2004). Therefore, there is no single correct way to organize metropolitan areas, and no single geography or organization of governance, and arrangements for service provision are place- and time-specific (Bahl 2013,Slack 2007,Parks, Oakerson 1993,1989). In the particular case of public services, efficient scales and preferences can be multiple and heterogeneous, and evolve over time (Slack 2007,Parks, Oakerson 1989). Public services also have diverse production functions and financial and cost structures (Parks, Oakerson 1989). The fundamental distinction between the provision and the production of public services makes the case for organizational structures that allow for a more complete depiction of metropolitan governance and its complexity. Local governments are provision units that use a variety of alternative production arrangements: direct production, private contracting, coordinated or joint production, or franchising. Therefore, metropolitan areas comprise multiple provision units that are linked in numerous ways to a variety of production units. This variety usually represents rational accommodations to diversity. The choice of governance arrangements is contingent upon a multiplicity of environmental factors, yet governance depends, above all, on the capacity to elaborate on, change and enforce the rules within which provision and production occur (Parks, Oakerson 1989). Governance structures can transcend municipal boundaries and allow problem solving, rule making and efficiency on a metropolitan basis. However, when close voluntary organization and cooperation are not achieved, metropolitan governance weakens (Parks, Oakerson 1993). Accordingly, the different levels of governance (provision and production arrangements and the sets of rules and institutions) are what matter (Figure 1). 3 Methodological Framework and Data Collection As a methodological strategy for this research we employed a comparative case study analysis implemented by means of a 3x3x3 model. The first 3 in the model refers to the selected metropolises, the second indicates the number of services and the third relates to specific aspects of governance (Figure 2). This approach is a useful starting point for an international and comparative analysis of metropolitan governance in the highly-urbanized countries of Latin America with its varying city sizes, metropolitan structures, and outcomes. The metropolitan areas of Bogota, Lima, and Mexico City are the subjects of this REGION : Volume 5, Number 3, 2018 52 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez Source: Authors’ elaboration based on Parks, Oakerson (1993) Figure 1: Metropolitan governance organization Source: Authors’ elaboration Figure 2: Components of the 3 x 3 x 3 model of analysis analysis. All three metropolitan areas have undergone processes of rapid metropolization which have engendered important challenges for the provision of public services and infrastructure. They all belong to the Latin American region and have some cultural background and colonial roots in common. The three metropolitan areas are capital cities that have special political-administrative status. Even though their countries operate under different political systems, with unitary governments in Colombia and Peru, and a federal government in Mexico, they have undertaken important decentralization processes. These metropolitan areas also offer the possibility of illustrating variability in governance structures. In addition, they present different historical forms of metropolitan expansion and institutionalization. Although the number of public services provided in metropolitan areas is extensive, we focus on three of the most critical sectors in the urban context that are generally provided at the local level: transport, solid waste collection, and water. These sectors are strategic in urban planning and affect the day-to-day life of the population. Moreover, they denote the kinds of service that pose unique challenges in metropolitan environments (Boex et al. 2013,Jones et al. 2014). Jones et al. (2014) suggest that governance plays an important role in the effective delivery of services in urban areas through coordination REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 53 mechanisms, finances, and technical operation. This analysis includes these three areas: coordination and production arrangements; financial sustainability; and service coverage and quality. Given the scope of this project, the analysis does not include elements such as civil society participation, transparency, and accountability. The data collection process included desktop and field work. Documental and secondary statistical information from international, national and local sources was gathered. The results and discussion in this paper also rely on the data collected during the fieldwork period. In 2016, we conducted field research in the three selected cities and organized a final seminar and a conference in Mexico City. The fieldwork included workshops, interviews and technical visits. Nine workshops were organized: one for each sector (transportation, water, and waste collection) in each city. The participants at these workshops were actors or experts in the governance of public service provision: the academic sector, civil society, local government and private suppliers. We located sources of potential participants based on their location and willingness to participate. The workshops were designed as small focus groups where participants reported on and discussed the situation and the challenges to each public service that different actors perceived at the metropolitan level. There was a number of guiding questions about the three categories of analysis, and we allowed other issues to emerge (see the guiding questionnaire and participants in the methodological appendix). The workshops lasted approximately two hours each, and took place in small auditoriums. Furthermore, twelve semi-structured interviews were carried out. The sample universe was composed of local authorities such as municipal mayors or specific local officials (in the urban services area), community leaders, and sector-specific managers or providers who were unable to participate in the workshops but were relevant actors in some area of urban public services. Although this was a small-scale interview project, it provided enough scope for identifying and developing cross-case evidence rather than generalities. We assessed the adequacy of the sample in terms not of size, but of the sample’s ability to supply key information needed for the analysis. Six technical visits to the metropolitan peripheries were incorporated as part of the field research. Due to time and budget constraints the number of technical visits was restricted. The criteria for choosing a location were access to some local informants, a big and a small municipality outside the central city, and the presence of important formal or informal housing development expansion. The assumption was that these municipalities would experience emerging and persistent governance issues. Technical visits involved observation, interviews and informal conversations with residents. The results were presented and discussed at the final seminar. Based on analysis of the transcripts and reports on the interviews, visits and workshops, major issues were identified and reported. A contextual characterization of the governance of each metropolitan area was developed. This was followed by an analysis based on the different services (transport, solid waste collection and water). The comparative approach allowed us to evaluate variations across metropolitan areas and services. This paper’s size limit precludes a full in-depth analysis of each case; nonetheless, valuable findings are discussed for an initial assessment of metropolitan governance. 4 Overview of Metropolitan Structures in Mexico City, Lima and Bogota On a larger scale, Latin American cities are expanding rapidly and frequently faster than population growth elsewhere in the country. The result has been the emergence of urban areas of a large territorial size comprising multiple jurisdictions. Alongside territorial and functional restructuring, metropolitan areas have faced political decentralization aimed at producing new spaces for participation, reducing fiscal imbalance problems, and organizing the local and territorial levels of the State in order to implement social policies and deliver services efficiently. Despite these generalized trends, metropolitan areas in each country have highly diverse features. This section presents background on the institutional and territorial structures in the metropolitan areas of Mexico City, Lima and Bogota. REGION : Volume 5, Number 3, 2018 54 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez Source: Authors’ elaboration Figure 3: Mexico City Metropolitan Area 4.1 Mexico City Metropolitan Area Mexico City Metropolitan Area (MCMA), one of the largest metropolitan areas in the world, is the result of the explosive growth and expansion of the urban center during the twentieth century. Due to the displacement of industrial activity and housing towards the periphery, the city began its expansion into other jurisdictions outside its administrative boundaries in the 1940s (Trejo 2013). At the time of the 2010 Population Census, MCMA comprised over 20 million inhabitants, and had a land size of almost 8,000 square kilometers and an average population density of 2,557 inhabitants per square kilometer (SEDESOL et al. 2012). In 2013, MCMA accounted for 18% of the national population and around 25% of total gross domestic product. MCMA includes the administrative area of Mexico City 1 , formerly called the Federal District, 59 adjacent municipalities in the State of Mexico, and a municipality in the state of Hidalgo (Figure 3). Mexico City proper, itself composed of 16 boroughs, is the political and economic seat of power. Prior to the approval of a political reform in 2015, it was governed by special statute. In contrast to states, it did not have full autonomy, and until 1997 its head of government was not elected directly by the inhabitants, but appointed by the President. Furthermore, the head of government had no constitutional or regulatory capacity and boroughs had neither the autonomy nor all the functions of municipalities. Metropolitan areas in Mexico do not have legal status as official jurisdictions, but the constitution allows intermunicipal cooperation on a voluntary basis. Several governments operate on different levels, leading to the evolution of different and frequently clashing policies and rules. The administrative powers of 60 municipalities overlap with the government of Mexico City, which in turn interacts with the powers of two different states, Mexico and Hidalgo, as well as with the power of the central government (Figure 4). Politico-administrative fragmentation, measured as the number of jurisdictions with more than 100,000 inhabitants, indicates that 39 municipalities and boroughs have populations of over that figure. This fragmentation decreases if we consider Mexico City proper as a single local government (24 jurisdictions with populations of over 100,000 inhabitants). Legal planning, coordination and political structures have not been conducive to metropolitan-scale organization. Attempts at constructing effective metropolitan agreements and commissions have been largely ineffective, due to the lack of financial, regulatory and decision-making authority (Cenizal 2015) 2 . Thus MCMA entails a complex set of 1Mexico City proper. 2 Article 115 in the Mexican Constitution allows for the coordination of states and municipalities to address urban problems. Two or more municipalities and their respective states are also allowed to create a conurbation commission. Article 122 allows cooperation between Mexico City and its neighboring municipalities. REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 55 Source: Authors’ elaboration Figure 4: Government structure, Mexico City Metropolitan Area governmental entities with overlapping federal, state, and local powers and an intricate organizational structure that complicates metropolitan governance arrangements, in particular planning schemes seeking to deliver services efficiently (Perlman et al. 2011). 4.2 Lima The Metropolitan Area of Lima includes the provinces of Lima and Callao. In the province of Lima, the metropolitan municipality assumes the functions of both regional government and provincial municipality. In the province of Callao, regional and provincial government are separate; this means that the Regional Government of Callao and the Provincial Municipality of Callao exercise their respective functions over the same jurisdiction. The province of Lima covers 49 districts governed by 48 district municipalities, whereas the capital district is governed by the Metropolitan Municipality of Lima. In turn, the Province of Callao has seven districts governed by six district municipalities, and the capital district of Callao is governed by the Provincial Municipality of Callao (Figure 5). The population has grown rapidly since the mid-twentieth century. In 1940, Lima and Callao had a population of 645,000 inhabitants; in 1972 this had risen to over three million, and in 1993 it was over six million. In the 1970s the two provinces became a conurbation (Figure 6). In 2013, the population was 9,752,000, of which one million were in Callao (INEI 2014). A total of 25 of the 49 districts have a population of over 100,000. Lima not only has special arrangements as a capital district; it also has been treated differentially in the decentralization process. While other regional governments, including the regional government of Callao, have taken on functions such as health and education, the process has been discriminatory against the Metropolitan Municipality of Lima, where central government remains the provider of various public services (Di´alogos de Pol´ıticas P´ublica 2015). The Organic Law of Municipalities allows the use of coordination mechanisms between municipalities to ensure the efficient use of public resources. Municipalities can create associations with other municipalities called mancomunidades. In order to provide services and implement joint infrastructure projects, seven such associations have been created. They have developed efforts to coordinate and provide services in security and waste management 3 . However, mechanisms for coordination between the municipalities of Lima and Callao have been weakly implemented. 3 http://www.limacomovamos.org/boletines/las-7-mancomunidades-de-lima/#!prettyPhoto[inline]/- 0/ REGION : Volume 5, Number 3, 2018 56 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez Source: Authors’ elaboration Figure 5: Government structure, Metropolitan Area of Lima 4.3 Bogota According to the National Administrative Department of Statistics (DANE 2017) the Metropolitan Area of Bogota includes Bogota District and the municipalities of Bojac´a, Cajic´a, Ch´ıa, Cogua, Cota, El Rosal, Facatat´ıva, Funza, Gachancip´a, La Calera, Madrid, Mosquera, Nemoc´on, Soacha, Sibat´e, Sop´o, Subachoque, Tabio, Tenjo, Tocancip´a and Zipac´on (Figure 7). It had a population of 7.8 million inhabitants in 2005 rising to 9.3 million in 2015 4 , making Bogota the largest metropolitan area in Colombia, one of the largest in South America, and one of the 33 most-populated metropolises in the world (Smith 2014). The Bogota District was the product of Decree 3640, approved in 1954, which annexed the surrounding municipalities of Engativ´a, Fontib´on, Suba, Usme, Usaqu´en and Bosa through the Seventh Ordinance of the Administrative Council of Cundinamarca. The territory of Sumapaz was annexed in 1955. According to Article 199 of the 1986 political constitution, administration of the district is the responsibility of the municipal council. Therefore, the city of Bogota is organized as a special district, without subjection to the ordinary municipal regime, under the conditions fixed by the law. With the approval of the Colombian political Constitution of 1991, Bogota became a Capital District with special status. The new Constitution, which includes an Organic Statute for Bogota, redefines the Capital District and eliminates the concept of annexed municipalities to introduce the concept of localities. The Organic Law of Territorial Ordering sets the principles of good governance in the metropolitan area. This law recognizes that metropolitan areas are territorial associative schemes and that the national government should promote metropolitan cooperation. Article 15 allows associations between metropolitan areas. These can take place between two or more metropolitan areas to jointly organize the provision of public services, the implementation of regional projects, and the fulfillment of administrative functions. Such projects may be developed through contracts, agreements or plans. There are also municipal associative bodies, as in the case of Savannah Centro and Northern Savanna and an agreement of cities in the periphery. Although the Bogota metropolitan area is fragmented, unlike in Mexico City and Lima the dynamics of the metropolitan area are strongly concentrated in Bogota District (Figure 8). 4 For more information about the census in the metropolitan area: http://www.dane.gov.co/files/- censo2005/resultados am municipios.pdf REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 57 Source: Authors’ elaboration Figure 6: Metropolitan Area of Lima 5 Metropolitan Governance of Public Services: An exploratory examination In this section we analyze the governance structures in place in our three metropolitan areas according to the explicit and implicit constituent elements of service supply. The main findings regarding coordination, financial sustainability and coverage/quality are discussed. Considering the issue of coordination contributes to understanding governance organization, whereas looking at the financial aspects and coverage help to illustrate efficiency and equity. The approach suggested by Parks, Oakerson (1993) and summarized in Figure 1is a useful guiding scheme to identify the different arrangements and levels of metropolitan governance that operate in each service and metropolitan area: arrangements for production (level 1), arrangements for provision (level 2) and the set of rules for production and provision (level 3). 5.1 Waste collection Each metropolitan area has a more or less complex governance organization and operation depending on the diversity of actors involved in its regulation, management and production. According to Article 115 of the Mexican Constitution, solid waste management is provided by the municipalities. In Mexico City proper each borough must provide the service (level 2). Three schemes of production are: public; private; and public-private (level 1). In some boroughs, participatory budgeting projects for local waste collection is a supplementary formal mechanism for providing the service. In both the State of Mexico and Mexico City proper there is a large informal sector (waste pickers, burreros -pickers that use donkeys to transport waste- or carretoneros -pickers that transport waste by carts-) who have historically had strong unions and powerful leaders. Some municipalities have a Councilman (regidor) and in municipalities with greater organizational complexity there is a Director of Public Services. Regarding level 3 of governance – where the rules for provision and production arrangements for service delivery are made – the government of the State of Mexico formulates waste management policy through the Ministry of Environment. In Mexico City proper the Ministry of the Interior, the Ministry of Works and Services through its General Directorate of Urban Services, the Ministry of the Environment and the Environmental Attorney of Land Management participate in urban solid waste regulation and management. REGION : Volume 5, Number 3, 2018 58 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez Source: DIRNI, recovered by Mayor of Bogota (2015) Figure 7: Metropolitan area of Bogota according to DANE (2005 census) In Lima, provincial municipalities are responsible for waste disposal whereas district municipalities are in charge of the collection and transportation of solid waste. In the capital districts of Lima and Callao, the provincial municipalities are responsible for the collection and transport of solid waste (Durand 2012). Service provision operates under a two-tier arrangement throughout fifty districts and two provinces (level 2). Cleaning and waste collection are supplied directly by municipalities or by private companies contracted to municipalities (level 1). Two large private companies, Petramas and Innova Ambiental, provide the service for several municipalities. There are also municipalities with mixed production schemes. Provincial municipalities regulate the disposal of solid, liquid and industrial discharge. The Metropolitan Municipality of Lima has a special legal regime with special functions in sanitation. It organizes the Metropolitan System of Solid Waste Treatment and Disposal, signs concession contracts for waste management services, and controls their operation. The district municipalities decide on areas for landfill and waste accumulation (Organic Law of Municipalities Nr 27972). The Ministry of Health’s General Directorate of Environmental Health controls landfill and authorizes the work of companies that collect municipal waste. The Direction of Environmental Quality formulates national policy on solid waste management; however, it conducts waste management policy with limited normative prerogatives (level 3) (Durand 2012). According to Law 142, normative control of the waste collection service in Colombia is the responsibility of the National Regulatory Committee for Drinking Water and Basic Sanitation, which regulates competition between service providers to avoid monopolies. The National Superintendence of Domestic Utility Services controls and inspects the efficiency of the service. There is a Municipal Special Administrative Unit of Public Utilities which directs, controls and supervises the provision of road-cleaning services and the collection and final placement of solid waste. The District Department of Environment regulates and promotes environmental sustainability. Lastly, the municipal intercapital consortium supervises the administrative, technical, operative, commercial, economic, and financial aspects of solid waste management and collection (level 3) (Ciudad Limpia 2017). The service is provided by Bogota Capital District and the rest of the municipalities (level 2). In recent years, Bogota’s solid waste service has been supplied by the Water Company. There are also other companies involved, such as Ciudad Limpia, which deals with waste in Bosa and Kennedy, and a number of recycling companies that collect, transport, and REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 65 variation to be found across metropolises and sectors. They also illustrate the need, in less developed countries, for a debate on metropolitan governance that goes beyond the traditional approach to jurisdictional fragmentation and metropolitan governments. These findings can be used as a basis from which to identify questions for future comparative research or further in-depth case studies either by sector or by metropolitan area. Future work in our research will include in-depth analysis by sector to deal with questions that include the historical evolution of metropolitan configurations; the way politics have shaped metropolitan bureaucracy and government; how civil participation and transparency are embedded in metropolitan governance organization; and private actors’ role in the production of services. Acknowledgement We gratefully acknowledge the financial support and generosity of Brown International Advanced Research Institutes (BIARI), without which this research could not have been completed. We thank 2 anonymous reviewers for their comments on an earlier version of the manuscript and Professor Patrick Heller for his comments on our project. We would also like to show our gratitude to El Colegio de Mexico, and the Chamber of Commerce of Bogota for supporting the organization of different activities during the fieldwork in Mexico and Colombia. Finally, we wish to thank various people and organizations that participated in the workshops and interviews. References Bahl R (2013) The decentralization of governance in metropolitan areas. In: Bahl R, Linn J, Wetzel D (eds), Financing metropolitan governments in developing countries. Cambridge, MA, Lincoln Institute of Land Policy, 85–106 Bird R, Slack E (2007) An approach to metropolitan governance and finance. Environment and Planning C: Government and Policy 25[5]: 729–755. CrossRef. Boex J, Lane B, Yao G (2013) An assessment of urban of urban public service delivery in South Asia: An analysis of institutional and fiscal constraints. Urban Institute Center on International Development and Governance Research Report. Washington, D.C. The Urban Institute Bogota (2015) Proyecto plan de desarrollo 2016-2020. Available in: http://www.sdp.gov.- co/sites/default/files/20160429 proyecto pdd.pdf Cenizal C (2015) Governing the metropolis: The evolution of cooperative metropolitan governance in Mexico City’s public transportation. Master dissertation. Massachusetts Institute of Technology, Cambridge MA, USA Ciudad Limpia (2017) Tarifas aplicadas para los usuarios no aforados. Available in: http://www.ciudadlimpia.com.co/site/index.php?.option=com content&view=article&id=17&Itemid=159 DANE (2017) Bolet´ın t´ecnico. Available in: https://www.dane.gov.co/files/investigaciones/- boletines/transporte/bol transp IVtrim16.pdf Di´alogos de Pol´ıticas P´ublica (2015) Nota de pol´ıtica p´ublica de descentralizaci´on Durand M (2012) Waste management in a developing city: Capitalising on current difficulties in Lima? Flux 87[1]: 18–28 Feiock R (2004) Introduction: Regionalism and institutional collective action. In: Feiock R (ed), Metropolitan Governance: Conflict, Competition, and Cooperation. Georgetown University Press, Washington, DC, 3–16 Fern´andez J (2002) Servicios p´ublicos municipales. Instituto Nacional de Administraci´on P´ublica (INAP), M´exico REGION : Volume 5, Number 3, 2018 66 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez IMCO (2012) Propuestas transversales. Acciones urgentes para las ciudades del futuro. Instituto Mexicano para la Competitividad, M´exico INEGI (2007) Encuesta origen-destino 2007. Instituto Nacional de Estad´ıstica y Geograf´ıa, M´exico INEI (2014) Una mirada a lima metropolitana. https://www.inei.gob.pe/media/MenuRecursivo/publicaciones digitales/Est/Lib1168/libro.pdf Jones H, Clench B, Harris D (2014) The governance of urban service delivery in developing countries. Report overseas development institute. march, 2014. available in: https://www.odi.org/publications/8329-urban-services-poverty Lowery D (2000) A transactions costs model of metropolitan governance: Allocation versus redistribution in Urban America. Journal of Public Administration Research and Theory 10[1]: 49–78. CrossRef. Mayor of Bogota (2015) Somos un territorio metropolitano. Available in: http://www.- sdp.gov.co/imagenes portal/documentacion/OficPrensa/Cartilla Somos Un Territorio Metropolitano.pdf MINAM (2014) Sexto informe nacional de residuos solidos de la gestion del ambito municipal y no municipal 2013. Ministerio del Ambiente, MINAM. Lima, Peru. http://redrrss.minam.gob.pe/material/20160328155703.pdf Ministerio de Transportes y Comunicaciones (2016) Autoridad de transporte urbano para Lima y Callao: propuesta conceptual, Cooperaci´on Alemana. https://www.mtc.gob.- pe/estadisticas/Autoridad de Transporte Urbano para Lima y Callao-144dpi.pd Oates W (1997) On the welfare gains from fiscal decentralization. Journal of Public Finance and Public Choice 2-3: 83–92 OECD (2015) Getting mobility in the Valle de M´exico on the right track, in OECD territorial reviews: Valle de M´exico, Mexico. Technical report, Paris. CrossRef. Parks R, Oakerson R (1989) Metropolitan organization and governance: A local public economy approach. Urban Affairs Quarterly 25[1]: 18–29. CrossRef. Parks R, Oakerson R (1993) Comparative metropolitan organization: Service production and governance structures in St. Louis (MO) and Allegheny County (PA). Publius: The Journal of Federalism 23[1]: 19–40 Perlman B, J. J, de D, Pineda G (2011) Rethinking a megalopolis: A metropolitan government proposal for the Mexico City metro area. State and Local Government Review 43[2]: 144–150 Prud’homme R (1995) The dangers of decentralization. The World Bank Research Observer 10[2]: 201–220 Rosales A (2015) Econom´ıa pol´ıtica del servicio de agua y saneamiento en la Ciudad de M´exico. PhD thesis. CEDUA, El Colegio de M´exico, M´exico SEDESOL, CONAPO, INEGI (2012) Delimitaci´on de las Zonas Metropolitanas de M´exico 2010. Secretar´ıa de Desarrollo Social. Consejo Nacional de Poblaci´on. Instituto Nacional de Estad´ıstica, Geograf´ıa e Inform´atica Slack E (2007) Managing the coordination of service delivery in metropolitan cities: The role of metropolitan governance. Policy research working papers. CrossRef. Smith D (2014) World city populations 1950-2030. Available in: http://luminocity3d.- org/WorldCity/#3/-7.36/-75.94 Storper M (2014) Governing the large metropolis. Territory, Politics, Governance 2[2]: 115–134. CrossRef. REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 67 Tiebout C (1956) A pure theory of local expenditures. Journal of Political Economy 64[5]: 416–424. CrossRef. Treisman D (2000) Decentralization and the quality of government. Unpublished paper, University of California, Los Angeles. available in: https://www.imf.org/external/- pubs/ft/seminar/2000/fiscal/treisman.pdf Trejo A (2013) Las Econom´ıas de las Zonas Metropolitanas de M´exico en los Albores del Siglo XXI. Estudios Demogr´aficos y Urbanos, 28(84), pp. 545-593. Distrito Federal. Centro de Estudios Demogr´aficos, Urbanos y Ambientales. El Colegio de M´exico Yaro R, Ronderos N (2011) International metropolitan governance: Typology, case studies and recommendations. Developed for the Colombia urbanization review. The World Bank Group, Regional Plan Association c 2018 by the authors. Licensee: REGION – The Journal of ERSA, European Regional Science Association, Louvain-la-Neuve, Belgium. This article is distributed under the terms and conditions of the Creative Commons Attribution, Non-Commercial (CC BY NC) license (http://creativecommons.org/licenses/by-nc/4.0/). REGION : Volume 5, Number 3, 2018 68 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez A Appendix: Fieldwork Guiding questions (focus groups and interviews) 1. What is the role or what place does the service occupy in the metropolitan/urban agenda? 2. What is the general diagnosis (depending on the case) of the main problems faced by the provision of (water provision, waste recollection and public transport) at the metropolitan level and in the metropolitan periphery in particular? 3. In terms of coverage, to what extent can we speak of an accessible and universal service? 4. What is the assessment of the frequency and quality of the service? 5. What is the appreciation of the characteristics and the physical support of the service? 6. Are there infrastructural or operational deficiencies? 7. To what extent do authorities worry about improving the provision of the service? 8. What are the perspectives, limits and opportunities for the expansion of the service to reach metropolitan coverage? 9. What are the possibilities for an Integrated Metropolitan Service System? 10. What are the challenges for local governments in providing te service? 11. What are the general characteristics of the tariff system and the cost of provision? 12. What is the general evaluation of the financial sustainability in the provision of the service? 13. What is the evaluation of the current institutional and operational coordination between different jurisdictions and levels of government? 14. What efforts are developing at different tiers of government to improve the service? 15. What is the role of political factors in the operation and provision of the service? Technical visits Ecatepec (Mexico City) Melchor Ocampo (Mexico City) Puente Piedra (Lima) Soacha (Bogota) Ciudad Bolivar (Bogota) Interviews 1. Bogota Municipality of Soacha (director of public services) Community leader (Ciudad Bolivar) REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 69 Table A.1: Focus groups: schedule and participants City Actors Water Waste Transport Academia — — — Civil society Recicle Colombia (NGO) TECHO (ONG) — Bogota Local government Local secretary of the environment Local secretary of the environment Transmilenio Provider Empresa de Agua de Bogot´a-“Acue- Empresa de Agua de Bogot´a-“Acue Transmilenio ducto” ducto” Academia — — — Civil society Ciudad Nuestra, Lima Como vamos, Alternativa, AFIN (NGOs) Luz Ambar, Transitemos (NGOs) Contribuyentes por respeto (NGOs) Local government Waste management office (municipa- Urban development office (Ate) Lima lities of Lima, Miraflores, San Miguel and Puente Piedra) Provider Waste management office (municipalities of Lima, Miraflores, San Miguel and Puente Piedra) Academia Expert on metropolitan water gover- Expert on solid waste managment Expert on urban transportation and nance (Centro Interdisciplinario de (Universidad Nacional Autonoma de mobility (El Colegio de Mexico) Estudios Metropolitanos) Mexico) Civil society Isla Urbana (NGO) Agencia de Gesti´on Urbana-AGU Institute for Transportation and De- Mexico city (Urban Management Agency) velopment Policy (ITDP) and ASIICSO Habitus (NGO) Local government Local secretary of the environment Local secretary of the environment — Provider Sistemas de Agua de la Ciudad de Local authorities of street cleaning Passenger Transport Network System Mexico-SACMEX (Servicio de limpia, Cuauhtemoc) (RTP) REGION : Volume 5, Number 3, 2018 70 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 2. Lima Municipality of Puente Piedra (manager of urban development) Autoridad Aut´onoma del Sistema El´ectrico de Transporte Masivo de Lima y Callao – AATE (agengy in charge of the Metro Project in Lima and Callao) Transport office, Municipalidad de Lima SEDAPAL (public company of water and sanitation) 3. Mexico City Metropolitan Area Ecatepec (They had accepted the meeting, but refuse to answer the questions) Melchor Ocampo Municipality (Mayor) Melchor Ocampo (director of urban services) Melchor Ocampo (director of water provision) Melchor Ocampo (coordinator or public transport) Consultant of Ferrocarriles Suburbanos (Suburban train) B Appendix: Summary of findings REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 71 Table B.1: Aspects of metropolitan governance in the waste collection service Bogota Lima Mexico City PROCESS Coordination * There is no coordination for the provi- * The Metropolitan System of Treat- * There is some institutional coordinasion of the service. Each municipal entiment and Elimination of Solid Waste tion within the Federal District. ty chooses a public or private operation. does not include Callao. * In municipalities of the State of * Before the absence of horizontal coor- * Despite strong normative incentives Mexico some public-private coordinadination, small municipalities sometimes for coordination and cooperation, there tion takes place when private companies allowed the Cundinamarca department are no adequate mechanisms to ensure provide the service as concessions. company to provide the service. institutional coordination. * An environmental metropolitan com- * There is some institutional coordina- * Advancement in horizontal coordimission focuses mainly on air pollution tion, mainly with the Association of nation through mancomunities. problems. Bogota Recyclers. * There is no metropolitan institutional action and an absence of horizontal coordination among jurisdictions. RESULTS Supply Financial * Fees are subject to the socioeconomic * Significant differences in payment rates * No official tariffs or fees. Sustainability classification of properties (estratos). across municipalities. * Payment is made via tips to drivers This creates the possibility of cross-sub- * Reliance on intergovernmental transfers and waste pickers. sidies. to provide the service where there is a * Costs shared between waste manage- * Fees vary from 3,096 to 28,508 Colomlow payment rate. ment and other areas of municipal bian pesos. * 17 districts have a 50% deficit in expublic services. * Total fees include sweeping and penditure coverage. * Operation under a subsidy scheme. cleaning,commercialization, collection * Generally not self-sustainable, but * Variation across jurisdictions. and transport. there are significant differences across * Weak financial capacity and unsus- * Financially sustainable. districts. tainable provision. Demand Access, * Coverage of more than 90% in the ma- * Estimated 90% coverage * Covers between 88 and 98% of housecoverage and jority of municipalities, both in Bogota * Problems of low quality holds quality and in the metropolitan area (official * Variation across areas depending on * Lower coverage in the Northeast data collected only in formal settlesocioeconomic conditions periphery ments) * Highly inefficient in quality and fre- * Success in reaching all socioeconomiquency but with great variation across cally vulnerable areas via the stratifijurisdictions. cation transfer system. REGION : Volume 5, Number 3, 2018 72 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez Table B.2: Aspects of metropolitan governance in water provision Bogota Lima Mexico City PROCESS Coordination * There is coordination between the mu- * Intermunicipal coordination is not an * A multiplicity of actors and jurisdicnicipalities. Even though water issue since all municipalities are serviced tions translates into fragmented models provision is a municipal function, the by SEDAPAL. of provision. Bogot´a company (EAAB) competes as a * Weak vertical coordination between * Rare cases of municipal association; public society but with private logic. SEDAPAL and municipalities in Lima weak intermunicipal coordination. Provision to the area of Soacha next and Callao. * Weak vertical coordination with Fede- to Bogota. ral institutions. RESULTS Supply Financial * Tariffs are fixed according to six levels * Operational costs covered by tariffs. * Tariffs cover 64% of operating costs, sustainability of “estratos” defined by the socioecono- * Infrastructure investments not covered government subsidizes the rest. mic status of households. by tariffs. * Subsidies in Mexico City based on * 6m3of water is provided to each * Large infrastructure projects financed geographic criterion depending on the household of estrato 1 for free. by central government transfers. socioeconomic classification of neighbor- * Operational costs are covered by * Tariffs have subsidies based hood. tariffs. on consumption. * There is significant heterogeneity in * The company is considered financially * SEDAPAL is transitioning to a subsidy the financial situation among jurisdichealthy. based on socioeconomic status. tions depending on the provision scheme. * Overall, SEDAPAL is a financially * Provision in Mexico City appears to healthy company. be relatively stable financially. * Small municipalities in the State of Mexico that do not meet the criteria for establishing their own service operator have worse financial conditions. Demand Access, * Almost 100% in legalized neighbor- * Around 89% of households have a * Piped water connection inside the coverage and hoods. water connection inside their house. houses of approximately 79% of metroquality * In Bogot´a 98.6% of neighborhoods; * Availability of the service is not a politan population. in Soacha 82.8%; in Sabana 96.3%. problem. * 72% of population has daily access to * 24 hours of running water on average water. in Lima Centro. * Highly uneven spatial distribution of * Between 19 and 22 hours in the periaccess to the daily water service. phery. * Most peripheral municipalities and boroughs have lower availability. REGION : Volume 5, Number 3, 2018 A. B. Trejo Nieto, J. L. Ni˜no Amezquita, M. L. Vasquez 73 Table B.3: Aspects of metropolitan governance in public transport Bogota Lima Mexico City PROCESS Coordination * There is a consolidated model for the * The system is fragmented, but there * Provision is fragmented ‘administraconstruction of infrastructure, but withhave been efforts to integrate it tively’ between different transport out a real metropolitan approach. jurisdictionally. systems and jurisdictionally between * Intermunicipal transportation is De- * Integration with private operators is Mexico City and metropolitan municipartments’ responsibility. necessary. palities. * Transmilenio offers a service to only * Lima and Callao have agreed that * There have been projects towards the four stations outside of Bogota’s borders, both can provide permission to private integration and coordination of systems in Soacha companies to operate in both provinces. but the initiative has not developed suc- * There is no integration nor coordinacessfully, with the exception of some eletion between systems. For instance, difments such as payment methods (Metro ferent payment systems operate in the and Metrobus). city for the Metro, the Metropolitano and secondary routes. RESULTS Supply Financial * The system is sustainable due to finan- * After almost six years the Metropolita- * Transport systems operating only in Sustainability cial support, but is not self-sustainable. no has reached equilibrium point where Mexico City are heavily subsidized. * Transmilenio is funded directly by the outgoings of the operation are * Lack of technical analysis of costs and the District Government of Bogot´a. covered by customer fares. income structures. * The SITP has problems with being fi- * The Metro is subsidized by central go- * Variability between systems and nancially sustainable based on fares vernment which allows people to access jurisdictions. taken. the service; otherwise fares would in- * The commuter train, Suburbano, re- * In the rest of the municipalities, intercrease and become unaffordable for presents a case of uncertain financial municipal metropolitan buses are run some population groups. sustainability. privately, and most are financially * Consession services face important sustainable. financial investment, maintenance and operation problems. Demand Access, * Good coverage in general. * High coverage but low quality. * Coverage is high in general, but pericoverage and * Problems in terms of quality in muni- * 54% of Lime˜nos think that transportapheral areas experience problems with quality cipalities outside the city of Bogot´a. tion is one of the main problems in the frequency or even lack formal transport city. Satisfaction with public transport services. is very low across the city * Concession service is highly inefficient, with poor quality, poor safety and low environmental sustainability. * The BRT system, Metrobus, and the Metro operate beyond capacity, affecting quality. * The suburban train is best rated in terms of frequency, safety and quality, but is also the most expensive. REGION : Volume 5, Number 3, 2018 L. E. Quintero, P. Restrepo 103 between points on an oblate spheroid (Vincenty 1975), an approximation of the earth, ignoring any actual road system 8 . A more realistic measure, as suggested by Lall et al. (2004) and Combes, Gobillon (2015), is actual driving distances, which we construct using Open Source Routing Machine (OSRM) and OpenStreetMap9. 4 Results and discussion Table 4shows the results of regressions of the model specified in equation 2. In the main specification that constructs MA using population, the estimated impact of MA is negative. A possible explanation for this effect is real income differences that result after a negative population shock and the effect these have in the influence of MA on population flows. The two main effects of a negative population shock discussed in Quintero, Restrepo (2017) are: First, frictions in the dynamics of productivity tend to maintain differences in nominal wages between large and small cities shortly after the shock, because productivity depends on the historical accumulation of production and knowledge. At the same time, housing prices decline in both cities due to the reduction in demand and the short run durable housing stock (Brueckner 2000). This changes the real incomes and creates incentives for labor to reallocate from smaller to larger cities (originally more productive but more expensive). The induced movement of population will be particularly strong for cities with larger MA because they have those larger, more productive, labor markets nearby for the fleeing population. Because of these income differences, and because smaller cities will have a relative higher MA 10 in a fixed system of cities, this result would also predict concentration of population in fewer larger cities after a negative population shock, which is consistent with the evidence11. The effect after instrumentation is only significant for the MA measures that use population, not our robustness test that uses NLs. One possible explanation comes from the interpretation of the channel through which MA impacts population growth. Our results suggest that the population flow is determined by being near populated places more than being near places with large economic activity. It could be the case that it is the access to large labor markets that matters the most, as opposed to just economic activity, which could be determined more by capital in cities focused on capital intensive or extractive industries. Another possible interpretation of the difference in the results could come from the changes in the sample of cities used (see discussion in Section 3.2). The NLs sample of cities is smaller and concentrated in larger cities. If the negative effect of MA is mainly led by smaller cities, then our measurement of MA with NLs would not be appropriate, and we should rely on the population-based measurements. This result is in agreement with Greenstone et al. (2010), which discusses that the effect of MA is larger for smaller cities because they rely more on outside markets. Yet, results are robust to using either geodetic distance or driving distance, which makes the former preferable for this application given its much lower cost to calculate. The role of local market size changes significantly when using measures with NLs and population. In specifications 1-4 a larger local market is associated with lower population loss, as predicted in the Brezis, Krugman (1997) model. The effect is not significant for the MA measure that uses NLs. As before, it could be the case that either local agglomeration economies are led by population size and not the magnitude of the economy, or that the effects are different because of sample selection implied by the nature of NL measurement. Finally, the effect of belonging to a formerly communist country is also different in the different specifications. Cities in former communist countries lost, on 8 High altitudes imply errors in this approach. In the cities in our dataset, this does not seem to be an issue. Only Tajikistan and Kyrgyztan have few small towns with altitudes higher than 3.2 km, but their populations are lower than 5,000 (hence, very low weight in any MA calculation). 9 Google maps data undergoes more strict validation but could not be used for the whole sample because of query volume restrictions. Calculation code is available from authors. Subsamples were tested in Google maps and no significant changes were found. 10 In a system of N cities, the largest city j will only have access to smaller markets −j , while the other cities will have access to the large market j. 11See appendix section A REGION : Volume 5, Number 3, 2018 104 L. E. Quintero, P. Restrepo Table 4: The market access (MA) definitions follow notation in Table 3. The dependent variable is the annual population growth between year 2 and 3 MA(G,pop) MA(D,pop) MA(G,nl) MA(D,nl) (1) (2) (3) (4) (5) (6) (7) (8) OLS IV OLS IV OLS IV OLS IV Market local mkt 0.034* 0.036* 0.034* 0.038* 0.002 -0.000 0.003 0.007 (13.41) (12.97) (13.40) (12.42) (0.63) (-0.12) (1.14) (1.10) mkt access -0.002 -0.072* -0.001 -0.071* -0.013* 0.006 -0.011* -0.022 (-0.62) (-2.66) (-0.37) (-2.64) (-2.57) (0.31) (-3.94) (-1.17) Population Fundamentals nat. pop ∆0.007* 0.005* 0.007* 0.005* 0.009* 0.010* 0.010* 0.009* (16.60) (6.68) (16.64) (6.13) (12.72) (11.28) (13.08) (11.92) net migration 0.020* 0.023* 0.020* 0.025* 0.007* 0.005 0.010* 0.015+ (17.72) (13.94) (17.54) (11.68) (3.16) (1.43) (4.17) (1.76) Former 0.142* 0.097* 0.143* 0.101* -0.055* -0.045* -0.063* -0.075* communist (16.34) (4.95) (16.57) (5.50) (-3.20) (-2.39) (-3.66) (-2.54) Constant -0.461 0.018 -0.485 -1.015 0.117 0.097+ -0.050 -0.200 (-10.26) (0.09) (-10.74) (-4.90) (2.25) (1.72) (-0.78) (-0.76) Observations 5392 5381 5388 5377 2376 2368 2373 2365 R20.136 0.070 0.136 0.060 0.177 0.170 0.180 0.174 Adjusted R20.135 0.068 0.135 0.059 0.174 0.167 0.177 0.170 Notes: t statistics in parentheses; +: p <0.10, *: p <0.05 average, more population when considering the NLs sample, which could be again driven by sample selection. Other variables included have the expected values. In conclusion, we present evidence suggesting that having higher MA – when operating in an environment of population decline – is detrimental to city population growth. The impact is negative for the MA measure that uses population as a proxy for market size, our preferred specification. We use a comprehensive sample of cities in Eastern Europe and Central Asia, which allows us to capture the effect on cities in all ranges of the city size distribution. Even in countries where all cities are losing population, this result suggests that cities with higher MA would lose relatively more. Our results contrast with the positive effects of MA found in the literature, which are estimated in a context of population growth. In times of population decline, nearby large markets could instead act as a push factor, as the remaining population see them as possible labor markets. Future work should analyze the heterogeneity of the effects in cities of different sizes. Evaluating the causal impact of local market sizes in a context of decline is another interesting area to elaborate on the results of this letter. References Amiti M, Cameron L (2007) Economic geography and wages. The Review of Economics and Statistics 89[1]: 15–29. CrossRef. Anderson JE (1979) A theoretical foundation for the gravity equation. The American Economic Review 69[1]: 106–116 Andrienko Y, Guriev S (2004) Determinants of interregional mobility in Russia. Economics of transition 12[1]: 1–27. CrossRef. Au CC, Henderson JV (2006) Are Chinese cities too small? The Review of Economic Studies 73[3]: 549–576. CrossRef. Bosker M, Brakman S, Garretsen H, Schramm M (2010) Adding geography to the new economic geography: Bridging the gap between theory and empirics. Journal of Economic Geography 10[6]: 793–823. CrossRef. REGION : Volume 5, Number 3, 2018 L. E. Quintero, P. Restrepo 105 Brezis ES, Krugman PR (1997) Technology and the life cycle of cities. Journal of Economic Growth 2[4]: 369–383. CrossRef. Brueckner JK (2000) Urban growth models with durable housing: An overview. In: Huriot JM, Thisse J (eds), Economics of Cities: Theoretical Perspectives. Cambridge University Press, Cambridge, 263–289 Combes PP, Duranton G, Gobillon L, Roux S (2010) Estimating agglomeration economies with history, geology, and worker effects. In: Glaeser E (ed), Agglomeration economics. University of Chicago Press, Chicago IL. CrossRef. Combes PP, Gobillon L (2015) The empirics of agglomeration economies. In: Duranton G, Henderson V, Strange W (eds), Handbook of Regional and Urban Economics, Volume 5. Elsevier, Oxford Commander SJ, Nikoloski Z, Plekhanov A (2011) Employment concentration and resource allocation: One-company towns in Russia. European Bank for Reconstruction and Development Duranton G (2016) Agglomeration effects in Colombia. 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Roberts M, Stewart B, Prakash M, McWilliams K (2015) Global night time lights urban extents and growth patterns product. Alpha Version World Bank The Heritage Foundation (2018) Index of economic freedom. Technical report The World Bank (2018) Ease of doing business index. Technical report. CrossRef. Vincenty T (1975) Direct and inverse solutions of geodesics on the ellipsoid with application of nested equations. Survey review 23[176]: 88–93. CrossRef. Yoon C (2017) Estimating a dynamic spatial equilibrium model to evaluate the welfare implications of regional adjustment processes: The decline of the rust belt. International Economic Review 58[2]: 473–497. CrossRef. REGION : Volume 5, Number 3, 2018 L. E. Quintero, P. Restrepo 107 A Concentration Besides population decline, the region has presented concentration of population in fewer larger cities, which is precisely the prediction of Brezis, Krugman (1997) as a response to such a negative population shock. GINI coefficients for most ECA countries in table 5, for both population and night lights (NLs), support this. Only two countries show decreases in the population concentration, and the average growth in concentration is 0.51% per year overall. Table A.1: Concentration of Population and Economic Activity Population GINI Change NLs GINI Change year 1 year 2 year 3 year 1 year2 year 3 Serbia 0.507 0.507 0.7 + 1.81% 0.564 0.558 0.785 + 1.87% Kazakhstan 0.508 0.542 0.651 + 1.34% 0.64 0.725 0.739 + 0.74% Russia 0.608 0.629 0.758 + 1.17% 0.756 0.795 0.834 + 0.49% Bulgaria 0.628 0.68 + 0.83% 0.768 0.776 0.782 + 0.09% Belarus 0.668 0.713 + 0.67% 0.831 0.837 0.804 – -0.15% Albania 0.696 0.718 0.756 + 0.41% 0.77 0.783 0.814 + 0.27% Poland 0.712 0.735 + 0.32% 0.854 0.856 0.799 – -0.31% Tajikistan 0.61 0.629 + 0.31% 0.671 0.706 0.796 + 0.89% Moldova 0.656 0.708 0.688 + 0.23% 0.775 0.768 0.787 + 0.07% Kyrgyz Rep. 0.644 0.676 0.671 + 0.20% 0.799 0.797 0.811 + 0.07% Romania 0.622 0.63 0.641 + 0.15% 0.679 0.695 0.685 + 0.04% Ukraine 0.737 0.735 0.744 + 0.05% 0.834 0.891 0.814 – -0.11% Uzbekistan 0.674 0.652 0.65 – -0.17% 0.826 0.817 0.82 – -0.03% Georgia 0.674 0.672 0.64 – -0.24% 0.709 0.763 0.774 + 0.44% Notes: Estimated for the sample of cities which have both NLs and population data. Year 1, 2 and 3 refer to 1989, 1999, and 2010 (or the latest year available). In some countries one of these years might be different for one or two years. Table 1 shows specific years for the data available for each country. Change refers to the average annual change. REGION : Volume 5, Number 3, 2018 108 L. E. Quintero, P. Restrepo B Transition to Market Economies Notes: The Economic Freedom Index measures how economically free societies are, where freedom is understood as no government obstruction to the free movement of labor, capital, and goods (The Heritage Foundation 2018) Figure B.1: Economics Freedom Index Notes: The Ease of Doing Business Index measures how fair and friendly economies are to medium and small private firms (The World Bank 2018) Figure B.2: Ease of Doing Business Index REGION : Volume 5, Number 3, 2018 L. E. Quintero, P. Restrepo 109 C Using NLs as a proxy of economic activity Table C.1: NLs as proxy of economic activity Country Log NLs Constant Observations R2 Albania 1.24** -0.48 12 0.80 Belarus 1.25** -6.43 6 0.84 Bulgaria 1.17*** -6.04*** 140 0.72 Georgia 0.88* -1.19 7 0.6 Germany 0.72*** 0.95*** 1,980 0.41 Kazakhstan* 0.50** 21.20*** 28 0.13 Kyrgyz Republic 0.92*** 0.21 7 0.66 Poland 0.61*** 0.87*** 325 0.94 Romania 1.07*** -4.92*** 210 0.67 Russia 0.33*** 6.82*** 456 0.98 Serbia* 1.26*** -1.87 25 0.83 Tajikistan* 0.92*** 13.17*** 8 0.99 Turkey 1.40*** 0.21 52 0.74 UK 0.56*** 2.56*** 840 0.28 Ukraine* 0.85*** -0.69 135 0.5 Uzbekistan 1.01*** 1.94 39 0.95 Notes: Column 2 shows the coefficient of a regression of log region GDP on log region aggregate NLs. Test is performed for for 16 of the 17 ECA countries analyzed (Moldova does not produce subnational GDP data). Robust standard error in parentheses. ***: p < 0.01, **: p < 0.05, *: p < 0.1. Countries with asterisks use raw nighttime lights; remaining countries used radiance calibrated nighttime lights. c 2018 by the authors. Licensee: REGION – The Journal of ERSA, European Regional Science Association, Louvain-la-Neuve, Belgium. This article is distributed under the terms and conditions of the Creative Commons Attribution, Non-Commercial (CC BY NC) license (http://creativecommons.org/licenses/by-nc/4.0/). REGION : Volume 5, Number 3, 2018