2. Growth of Cities
"Cities are the powerhouses of modern economies" – Core Cities Report1
2.1 Urbanisation
The role of cities as catalysts for economic development has received increasing attention. This is evidenced by the government's economic transformation agenda and the Metropolitan Auckland Project among others.
A distinct urban growth period began in the 18th and 19th centuries in Europe as a result of the industrial revolution. This brought forth a significant structural change to society, which moved from subsistence, artisanal and agrarian production economies to economies based around surplus, exchange and specialisation. The concentration of population in cities allowed the benefits of specialisation to be achieved.
Currently, the United Nations (UN) estimates that approximately "180,000 people are being added to the urban population every day" (40 million per year).2 Throughout history, the world has experienced urbanisation, but the huge rise in the number of people making their homes in towns and cities is a recent phenomenon. While in 1950, only London and New York had populations in excess of 10 million, 15 cities had 10 million people or more by 1995. It is projected that 26 cities will have populations of more than 10 million people by 2025 – most of which will be located within the developing world.3
By the end of this decade, more than half of the world's population will live in urban areas, making humanity a predominantly urban species for the first time in history. UN estimates suggest that two-thirds of the world's population will live in cities within 50 years.
Reflecting these general trends, New Zealand shows strong urbanising patterns. Data from the 2002 New Zealand Official Yearbook shows that New Zealand is one of the most highly urbanised countries in the world.4 New Zealand recorded higher rates of urbanisation than the United States and Europe, and a rate roughly equivalent to Australia.5 It should be noted however, that comparisons between countries are somewhat fraught given the lack of a standard international definition. For instance, New Zealand considers a "main urban area" to be a conurbation of 30,000 people or more, whilst in Australia, such conurbations have 100,000 people or more.6
Data from Statistics New Zealand shows that New Zealand's urban population overtook the rural population during the 1910s (as set out in Appendix A, Figure A.1). It also shows that the rural population has stayed relatively constant from the 1920s, whilst urban growth has advanced consistently. Furthermore, between 1881 and 2001 the population of urban New Zealand increased by over 1500 percent, compared with an increase in rural areas of 85%.7 In essence, although New Zealand is perceived to be a predominantly rural country, it is actually highly urbanised and has been so for a considerable time.
The continuing dominance of large cities is also noteworthy. Whilst smaller cities of up to 100,000 people are becoming more and more prominent, and account for much of the world's urban growth, large cities continue to grow relative to those of smaller cities.8 This is evident in New Zealand where the population of Auckland continues to increase relative to Wellington, Christchurch, Hamilton and Dunedin (as set out in Appendix A, Figure, A.2).
These findings have important implications for New Zealand's economic transformation agenda, and highlight the increasing importance of Auckland to New Zealand's economic future.
In an effort to provide policy makers with a deeper understanding of the key issues and processes at play, the following section explores explanations, provided in the economic literature, for the growth of cities.
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