Tarik Gooptu: Address Global Inequality by Focusing on Cities – IMF Finance & Development Magazine | July 2019

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Author and context:
- Tarik Gooptu is in his second and final year of the master’s of philosophy in economics at the University of Oxford; originally from Washington, DC; bachelor’s degree from the University of Michigan in economics and political science.
- F&D essay contest runner-up; opinions expressed are those of the author and do not necessarily reflect IMF policy.
- Date on page: September 2019.
Central thesis:
- Tackling within-country inequality requires addressing barriers to upward mobility in cities.
- Efficiently planning public transportation investments to target metropolitan communities with low connectivity is a crucial step to reducing disparities in upward mobility.
- Smart urban planning, enabled by public–private partnerships, can convert cities into drivers of global economic convergence in living standards.

Key demographic facts:
- 55 percent of the global population resides in urban areas—an increase from 30 percent in 1950.
- The global urbanized population is projected to increase to 68 percent by 2050.
Core arguments:
- Rapid urbanization and severe intracity inequality make cities the appropriate focus for policies addressing inequality.
- Existing research shows within-country Gini indexes are highest as population densities increase, and cities tend to disproportionately reward people in the top income percentiles.
- Cities draw people primarily from the top and bottom of the income distribution, leading to polarization under current global economic restructuring (skill-biased technological change, automation, outsourcing).

Mechanism:
- Agglomeration economies provide benefits from proximity (reduced transportation costs) but uneven connectivity within cities prevents all residents from accessing these benefits.
- Underinvestment in roads, buses, train lines, and subways can cut off districts from jobs, education, and services.
- Higher mobility costs—longer commute times and lack of affordable transportation—are barriers to upward mobility for lower-income urban residents.
Policy implication:
- Local governments and the private sector can collaborate to improve access by building better public-transportation infrastructure targeted to low-connectivity metropolitan communities.

Facts and effects:
- Rio’s bus rapid transit (BRT) system was planned and funded via a public–private partnership and framed as necessary for the 2016 Rio Olympics.
- Major daily traffic flows run from lower-income neighborhoods (north and west) to downtown Rio (South Zone and part of the North Zone), where 60 percent of Rio’s formal employment is concentrated.
- The BRT allocated routes to an upper-income residential area instead of improving access from low-income neighborhoods to the city center.
- The city cut spending on health and police after going over budget on Olympics expenditures, worsening health and safety for the poor.
Lesson:
- Misallocation of infrastructure and public resources can perpetuate or worsen intracity inequality when routes and investments do not reflect citizens’ demand for access to jobs and services.

Successes:
- Curitiba’s BRT planning (Institute for Research and Urban Planning of Curitiba in the 1970s) used a public–private partnership model (Urban Development Agency of Curitiba and private bus companies).
- Outcomes: a low-cost, fast, and efficient means of transportation, running on green energy, operating successfully for 35 years; integrated transit provided access across the expanding city.
Limitations:
- By 2012, Curitiba failed to integrate its growing suburbs into its BRT system, cutting off low-income residents while upper-income residents switched to cars.
Implication:
- Policymakers require continual, proactive planning and up-to-date data (including origin–destination surveys) to match infrastructure to evolving population needs.

Targeted actions:
- Plan public-transportation investments to prioritize metropolitan communities with low connectivity.
- Use public–private partnerships to fund and operate transit systems, allowing creative approaches to cost burdens.
- Employ available economic data and origin–destination surveys to identify where populations need connections and what services they demand.
- Maintain proactive, ongoing integration of expanding suburbs and changing urban patterns into transit planning.
Multiple benefits:
- Improving access to public infrastructure allows low-income residents to benefit from agglomeration effects—jobs, schools, hospitals.
- Well-planned public transportation can lower inequality and help reduce cities’ carbon footprint, addressing both inequality and sustainability as many megacities face heavy pollution.
Conclusion:
- Addressing lack of mobility in cities is an efficient way to tackle inequality within countries; with effective planning and partnerships, growing cities can serve as sources of economic convergence rather than divergence.

Source: Tarik Gooptu, “A focus on cities can improve upward economic mobility,” F&D Magazine, September 2019.