From a crisis to another: a wasted decade of growth?

The Group of 20 (G20) as we know it was shaped a decade ago, securing the banking system and reigniting growth out of the 2008 global financial crisis. Just before that, the world had turned more ‘urban’ than ‘rural’, but nobody in the G20 really noticed, as it became the world premier macro-economic forum, supporting an ‘infrastructure for growth’ rationale. Since then, the G20 has barely been taking stock of the new complexity of multilateralism in an urban world where cities would be engines of growth, catalysts of raw resources consumption, major emitters of GHG, without any globally corresponding governance and regulation standards.[1]

A decade ago, the subprime mortgage crisis in the United-States which triggered the global financial crisis was largely a consequence of real estate finance going wrong, with massive quantities of housing supply delivered nowhere near basic services and urban amenities. A more careful observation of what happened on the ground might have helped raise early warnings. Yet until now, urbanization has dramatically remained below the radar of major global institutions, which have devoted secondary financial and human resources to it. The New Urban Agenda issued from the Quito Habitat III Summit organized by the United-Nations 2016 to set the course for sustainable urbanization in the next 20 years, did not even mention once the risks of pandemic diseases. 

The cascading impacts of urbanization powerful transformative force have been underestimated although urban growth has ceaselessly accelerated since the end of the Cold-War, and completely transformed the world, with an additional one billion urban dwellers just between the 2008 crisis and the current Covid-19 crisis. All the issues which have been left untapped by the post 2008 global recovery options, from social cohesion to informal labor, doubled by pressure on public expenditures and especially social infrastructure, should be carefully reviewed in light of recent urbanization demographics, in particular the youth bulge in the Global South.

There are as many young people aged 15-24 years today than the total world urban population in the mid 1970’s, an era which nevertheless echoes our times greatly, with the first report of the Club of Rome issuing the Limits to Growth report (1972) and the Oil crisis (1973). As the Covid-19 pandemic has caused a major global economic depression with lasting consequences, calls have multiplied to reset growth priorities along a low-carbon and more equitable pathway, with climate, biodiversity, the environment on land at sea facing unprecedented man-made challenges. 

It is the right time for ‘urbanization’ to become part of a renewed global economic agenda, but shaping a new sustainable economy will require more than just ‘global cities’, a birth-child of the post-Cold-War era reinforced over the years by many trendy concepts from the ‘creative class’ to ‘smart cities’. Urbanization has silently changed in nature in the past thirty years. Global cities and megacities are only the most visible part of a networked world of more than 4,000 cities of +100,000 inhabitants and 1,000 agglomerations or metro areas of +500,000 inhabitants. Cities have become part of transnational systems of interconnections on land, at sea –on coastal areas, underneath the sea, in the air and even in space, whereas multilateral institutions are still country-led.

Urbanization has become the foundation of China’s economic growth and political rise since the launch of the reforms of the early 1980’s, as it is now playing a central role in India’s development. In developed, higher income countries, cities have been acclaimed as drivers of growth and innovation since the end of the Cold-War, but they now face and echo rising concerns about natural resources limitations, inequalities and vulnerabilities, a new localism opposing globalization... As compared with the early 1970’s and even the early 1990’s, development opportunities do coexist with high levels of instability echoed by massive information and disinformation availability.

The sustainable foundations and infrastructure of an urban world

As cities are the epicenter of the Covid-19 crisis and their lockdown across the world has completely disrupted the global economy, the consequences of the first pandemic of the global urban era are devastating. They leave multilateral institutions with no other option than acknowledging the role of cities.

Cities, and mayors, have long called for more recognition of their role in tackling climate change, fostering innovation, resilience and more. Now, they are being called upon to provide rescue and recovery solutions, as did the Secretary General of the United Nations ahead of the September 30 UN Biodiversity Summit. We are at this very moment when urbanization becomes piece of the global puzzle to ‘do things differently.’ 

We argue that places such as the T20, the engagement group of think-tanks of the G20, mobilizing over two hundred major research and policy organization worldwide, should include urbanization as a priority in 2021 while G20 Italy looks for a new generation of infrastructure for growth solutions.

There is much evidence that the post 2008 recovery policies have deepened inequalities around the globe, in particular in cities and that public and private capital available in global markets often didn’t find its way to communities. As trillions are invested in stimulus and recovery packages, their long-term impact depends on how they will yield positive social multipliers and externalities, and how effective the coordination between global, regional, national and local levels will be.

Infrastructure investments can play a critical role on the way to shaping a new sustainable economy. Assuming that infrastructure investments are the cornerstone of future sustainability choices and that Multilateral Development Banks (MBDs) funding could have a multiplier effect to turn ‘billions into trillions’, new institutional and financial mechanisms need to be invented for cities to be consistently part of the equation. 

The group of cities of the G20 has called for the establishment of a Global Urban Resilience Fund at its closing summit in Riyadh early in October and its Communiqué raised the issue of partnering as a key. This comes after the launch of other global initiatives, such as the Gap Fund in 2019, while regional processes such as CDIA can already serve as a benchmark.

The G20 member States and IFIs should focus on the enabling conditions for strengthening future recovery investments by creating a G20 Urban Platform for recovery, along a fourfold rationale: 

• To articulate the argument for sustainable infrastructure investment with the reinforcement of social welfare capacities to reposition the Agenda 2030; 

• To revise of the processes by which local priorities are incorporated into IFIs development assistance programs, ensuring that local sustainability criteria are part of determining the fit of projects; 

• To speed up and multiply the allocation of financial resources for these purposes, including building up of structures for mobilizing and transferring international resources towards the local level;
• To measure the wellbeing of societies beyond GDP, an approach recently revived by the ‘Recoupling Dashboard’ project and echoed by the late T20 ‘Statement on Social Development Measurement’.

It is time for cities to take part to a global welfare alliance and there is not much time to lose. [2]