Asia's Urbanization Imperative

The largest wave of migration the world has ever seen is now under way in the Asia-Pacific, as citizens leave rural areas for the cities. To realize an Asian Century, this urbanization must be "smart" in every way, especially in terms of city livability, environmental sustainability and in fostering an ecosystem which is conducive to innovation.

The urban population of the Asia-Pacific region has risen from 33 to 43 percent of the total over the past two decades. East Asia is the regional leader with more than 50 percent of its population living in cities. Asia is home to more than half of the world's megacities - metropolitan areas with over 10 million inhabitants. And by 2050, some two-thirds of Asia-Pacific's population might be urban, heading towards the 85-90 percent urbanization rates of the advanced OECD countries.

People leave their rural lives in search of opportunity and hope. And many indeed find success, as evident from the rapid economic development in Asian cities which have become part of the global manufacturing and services economy. Too many, however, wind up in slums, which is still the lot of some 30 percent of Asia's urban population, or more than half a billion Asians. Cities in countries like Bangladesh, India, the Philippines and Vietnam are still afflicted by large pockets of urban poverty and infrastructure deficits, especially for piped water, sanitation and waste management, highlighting some of the many development challenges facing the region.

Recent reports of high levels of air pollution in Beijing highlight the critical challenge of green urbanization. Eleven of the world's 20 most polluted cities are in Asia. Air pollution contributes to the premature death of half a million Asians each year. Indeed, urbanization comes with many environmental costs, not only air quality, but also noise and congestion. Fifteen Asian cities are among the world's 20 cities which are the most exposed to rising sea levels due to climate change - a problem to which Asia is also now contributing as the region's per capita average greenhouse gas (GHG) emissions grew by 97 percent from 2000 to 2008, compared to a global increase of 18 percent.

There is much that governments can do achieve green urbanization. This is evident in the example of Singapore, which implemented traffic congestion pricing to cut traffic, and reduce pollution and fuel use, and that of China's Guangzhou whose bus rapid transit saves 30 million passenger hours per year.

Overall, urbanization can be a positive for the environment, if well managed through urban planning, clean transport and fuel switching. Key drivers of green urbanization are the higher productivity of the urban economy and the efficiencies of compact urban centers where less resources are consumed. Smart urbanization can also facilitate innovation (including green innovation), meaning "new" or "significantly improved" products, processes, marketing or organizations. Cities are the human hubs where most innovation takes place, and will thus be a key to success in the Asian Century.

This is especially important for advanced economies like Japan, Korea, Hong Kong or Singapore for which innovation and knowledge creation are now key drivers of development. For emerging economies, still making their way up the development ladder, absorbing and adapting global knowledge and technology is of most importance - even though "frugal innovation" can improve the lives of poor people through new goods and services adapted to their needs and budgets.

Which are the world's most successful innovation cities? And how do Asia's cities stack up in the innovation stakes? In this context, the Melbourne-based organization '2thinknow' has created the Innovation Cities Index which measures three preconditions for innovation, namely cultural assets, human infrastructure, and networked markets.

Cultural assets include arts, culture, sports, music, environment, parks and spaces - they inspire new ideas. Human infrastructure means universities and businesses which help with the development of ideas. And networked markets, through physical trade or digital communication, enable the sharing of ideas with the rest of the world. In other words, a melting pot of artists, academics and investors, men and women, young and old, and of different ethnic and cultural backgrounds, provides a potent force for generating and realizing new ideas. It also helps if there is an environment which tolerates or even encourages differences, rather than conformity, promotes risk taking, and does not instantly punish making mistakes.

It is perhaps not surprising that North American and European cities should lead the pack of Innovation Cities. These economies are already very much at the global technological frontier. And they are the heart of the free world. Boston and New York top the global ranking with the highest score for the Innovation Cities Index. San Francisco comes 4th, Seattle 10th, and Los Angeles 12th. Canada's Toronto also scores highly at 11th.

There are more European than American cities among the top 30 Innovative Cities, notably Vienna (3rd), Paris (5th), Munich (6th), London (7th), Copenhagen (8th) and Amsterdam (9th). The Asia-Pacific scores relatively well with seven cities in the global top 30, but lags noticeably behind North America and Europe. The highest scoring Asia-Pacific city is Hong Kong with a global rank of 14th. Then comes Melbourne at 18th, Sydney at 20th, Seoul at 21st, Tokyo at 25th, Shanghai at 29th and Singapore at 30th. India does not score highly, notwithstanding its reputation for 'frugal innovation' and its booming IT sector. Mumbai comes in at 108th globally.

This is of course just one indicator. But many others point in the same direction. The Global Innovation Index puts Switzerland, Sweden, UK, Netherlands, and US in the global top five. The unique multicultural city-economies of Hong Kong and Singapore are ranked 7th and 8th, while the next highest ranking Asia-Pacific economies are New Zealand (17th), Korea (18th), Australia (19th) and Japan (22nd).

Overall, Asian cities and countries seem to be laggards in the global innovation race. Innovation in Asia rarely involves disruptive, major breakthroughs, and tends to be "incremental innovation" which adapts and perfects innovations coming from elsewhere.

Over the years, there has been much analysis and speculation on the reasons, a few of which I will conclude with here. Government controls and regulations in many Asian countries stifle freedom of thought and action. Thus most small and medium enterprises tend to be subcontractors for large enterprises, rather than independent drivers of innovation. And financial systems are dominated by banks which service mainly large enterprises - risk capital for innovative start-ups is all too scarce.

In Asia, education systems tend to emphasize rote learning and memorization rather than critical thinking. All too often academics are locked away in prestigious ivory towers, rather than working in partnership with business. Societies are usually male-dominated, hierarchical, conservative and conformist, rather than risk-taking. And migrants are marginalized, rather than providing the power of diversity.

Most Asian governments are very conscious of their innovation challenge. Some even speak of the desire to create a new Steve Jobs or Bill Gates. But they are also uncomfortable with the free and open societies which provide the fertile soil that allowed such innovation leaders to flourish. And too often they perceive success stories like Ai Weiwei, Masayoshi Son or even Muhammad Yunus as threats than social assets. As the old saying goes, if you want to make an omelet, you have to break some eggs.

In this context, many Asian countries need to take new approaches in governing their urban economies and societies if they are to realize the vision of the Asian Century.

(John West is the executive director of the Asian Century Institute. This was first published in the bulletin of the APEC Study Center at RMIT University in Melbourne.)