Turkey Urbanization Review
Rise of the Anatolian Tigers
Briefing on Key Findings and Recommendations
Stephen Karam, Sustainable Development Program Leader, World Bank
April 29, 2015
1
Overview
Part I: Turkey’s System of Cities – Some Stylized Facts
• Provides a Macro-Perspective of the spatial demographic and
economic transformation of Turkey over the past 50 years
• Examines city competitiveness through analysis of firm location and
evolving economies of cities within Turkey’s System of Cities
Part II: Policies and Institutions that Made a Difference
Part III: The City System in Turkey: A Second Generation Urban Agenda
• Provides a micro-perspective of the challenges and opportunities of
urbanization at the city level, addressing the following key areas:
–
–
–
–
Urban Transport and Planning
Housing Market Analysis
Municipal Finance
Interagency Coordination
2
Part I: Turkey’s System of Cities
– Rapid Urbanization
Unprecedented pace of urban growth
Argentina
100
Turkey’s rapid urbanization has
transformed the country
demographically and
economically. Urban
population has grown from
25% (1950s) to 75% (today).
Brazil
90
80
Republic of
Korea
Mexico
70
Bulgaria
Turkey
60
Hungary
50
Turkey has followed Korea’s
path; China is catching up;
India remains largely behind.
South Africa
Greece
40
Portugal
30
Georgia
20
China
10
Egypt
0
India
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
3
Turkey’s urbanization enabled major structural
shifts in its economy and productivity
Turkey Snapshot
Turkey is a high performer
1960 Economic Structure & Output:
•
•
•
17.6% industrial share of GDP
26.4% services share of GDP
$6,000 or $1,567* per capita GDP
Today:
•
•
•
27% industrial share of GDP
64% services share of GDP
$13,737 or $10,666* per capita GDP
* PPP-based GDP per capita in constant 2005 international dollars and
nominal GDP per capita in current US$.
4
Turkey’s System of Cities highlights fluid
labor markets
Spatial Concentration of Population
Historically, labor migration
has been to cities along
coastlines and with market
access.
Ankara (public sector
intervention) represents the
main outlier.
5
But second-tier cities not far behind
0,45
•
•
The demographic rise of the
Anatolian Tigers is depicted in
this chart.
Over the last decade, Istanbul,
Ankara, and Izmir have seen
their share of urban population
decline, while cities like
Gaziantep, Kocaeli, Kayseri, and
Mersin have captured increasing
shares.
0,4
0,35
0,3
0,25
2000
0,2
2012
0,15
0,1
0,05
0
6
And recent firm location data seems to
align with demographic shifts
Spatial Distribution of Employment (new firms established from 2007-11)
Source: TOBB Survey Data
7
Part II: Policy Measures that Worked
• Letting Markets Work: Policies that enabled labor markets to work facilitated
agglomeration economies that generated jobs for incoming poor, rural migrants
• The Metropolitan Regime: The Metropolitan Municipality Law (1984) provided a
local administrative regime that could facilitate inter-jurisdictional coordination,
allowing planning and investments to operate at the scale and pace of growing city
economic footprints
• Amnesties Granting Legal Tenure: Eight amnesties (1949-90) granted millions of
rural migrants security of tenure, followed by regularization and access to services
• Housing Market Interventions: When incremental housing (cooperatives) could no
longer keep pace, passage of the Housing Development and Participation Law
(1986) and Housing Development Administration (1990) provided low income
housing, finance and accelerated scale in the supply of housing
• Strong Regulatory Framework for Municipal Budgeting: Maintaining a hard
budget constraint on local governments and utilities has instilled fiscal discipline at
the local level, generated strong local revenue surplus, budget predictability, and
stable local government finances.
• Special Programs: SUKAP was one program that intervened to help small
municipalities sustain services to communities with a low economic base
8
Metropolitan municipalities have a
“metropolitan effect”
Urban Population in Turkey, 2000-2011
• Population growth
dominated by the 16
metropolitan municipalities
70000
60000
Urban Population
in Thousands
50000
40000
30000
20000
10000
0
2000
Turkey
Metropolitan Municipalities
2011
Non-metropolitan
Rural
– Rural population declines
– Non-metropolitan
municipalities static
– Metro Municipality pop
growth 3X that of non
metropolitan municipalities
– 48% growth over 11 years,
implying a doubling of
population in 15 years
9
Metropolitan municipalities promote density
Average Density (inhabitant per km2)
• City cores are densely populated as
expected.
• Density is highest within 5 km of the
city core and then decreases gradually.
• Interestingly, densities are low in
municipalities that are within 50 km of
the city center but are not part of the
metropolitan administrative unit.
1400
1200
1000
800
600
400
200
0
Source: ABPRS, TurkStat and Urbanization Review Team
10
Turkish cities compare well to global comparators
Turkish cities compare well to a panel of 1,500
cities worldwide in achieving urban density
11
Metropolitan municipalities dominate in
attracting firms
Average Number of Firms per Sq. Km
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
All
Old
All
Metropolitan
New
Non-metropolitan
Manufacturing
Rural
Source: TOBB and ABPRS, TurkStats
12
Metropolitan municipality management
structures promote efficiency
Turkey fares well on commercial pricing of municipal water, while containing
domestic water use due to Metro municipality utilities. Urban Transport
system management is a potential area for similar reforms.
0,7
0,6
0,5
0,4
0,3
0,2
0,1
0
All
Old
All
Metropolitan
New
Non-metropolitan
Manufacturing
Rural
Source: Global Water Intelligence, GWI Market Report, Sept 2011
13
Government Policy Shift: Public Investment in Education
Aims at Spatial Equity
To offset economic gains
in the west, GOT shifts
resources to support
development of human
capital in the eastern
hinterland.
2001
2011
This shift promotes equity
in access to basic
education across the
nation.
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Part III: City System in Turkey
Turkey’s Key Challenges and Opportunities in Building
Sustainable Cities
Despite important progress made across Turkey’s System
of Cities, there are significant and critical challenges at
the city level, particularly in second-tier metropolitan
cities that are still experiencing significant population
growth rates of 4% or more annually.
15
Turkish Cities do not compare well with peer
cities in terms of Mass Transit Options
(Meters of High Transit Capacity per Capita)
Motorization rates have increased more than ten-fold in the last 30 years.
250
200
150
100
197
178
152
92,54
83,54
62,6
50
59,55
35,32
33,47
26,27
16,1
15,3
13,74
10,8
10,13
5,52
0
16
And Urban Planning Weaknesses Highlight Longterm Problems with Management of Growth
(City Growth East is bifurcated by Military Base)
17
60%
10%
12/10/2007
30/11/2007
18/01/2008
7/3/2008
25/04/2008
13/06/2008
1/8/2008
19/09/2008
7/11/2008
26/12/2008
13/02/2009
3/4/2009
22/05/2009
10/7/2009
28/08/2009
16/10/2009
4/12/2009
22/01/2010
12/3/2010
30/04/2010
18/06/2010
6/8/2010
24/09/2010
12/11/2010
31/12/2010
18/02/2011
8/4/2011
27/05/2011
15/07/2011
2/9/2011
21/10/2011
9/12/2011
27/01/2012
16/03/2012
4/5/2012
22/06/2012
Housing Demand Side Vulnerabilities
Term structure for housing loans (% shares in total loans)
3 to 5 years
50%
5 to 10 years
40%
30%
20%
Less than 3 years
10 to 15 years
15 to 20 years
0%
Less than3 years
3 to 5 years
5 to 10 years
10 to 15 years
15 to 20 years
Limited access to housing finance is eroding household
savings and reducing options for financial diversification
25,0%
20,0%
15,0%
10,0%
5,0%
Gross domestic savings (% of GDP)
Value addition in ownership of dwelling as a % of GDP
Source: DDP, World Bank
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0,0%
Rising material and labor costs contributing to
rising housing costs …
Higher production cost in recent years made housing less affordable to the poor
140
130
120
110
100
90
80
Q1
Q2
Q3
Q4
Q1
2008
Q2
Q3
Q4
Q1
Q2
2009
General
Labor Cost
Q3
Q4
Q1
2010
Materials
Q2
Q3
2011
House price index
Source: Turkish Statistical Institute; GYODER, 2009 and 2011.
Q4
Together, these factors made housing less affordable
for the urban poor
Share of Expenditure on Rent + Utilities
Comparison between 1st and the 10th Decile
50,00
43,2
45,00
35,00
39,8
38,5
40,00
36,6
34,1
30,00
26,8
29,2
27,2
28,5
26,4
25,00
20,00
15,00
10,00
5,00
0,00
2005
2006
2007
Decile 1
2008
2009
Decile 10
Source: Household Budget Surveys for 2005 to 2009.
Local Government Budget
• Local Government Sector is
financially stable with
several years of positive net
operating revenues, but
90,0
Local Government Budget 2007-2013
80,0
70,0
60,0
50,0
40,0
30,0
• In keeping expenditures in
line with low revenue yield
cities are under-funding
investment needs and not
provisioning for future
growth
20,0
10,0
0,0
2006
2007
2008
Current revenues
2009
2010
2011
Current expenditures
2012
2013
2014
Current balance
22
1,5
OECD-Total
United States
United Kingdom
0,5
Turkey
Switzerland
Sweden
Spain
Slovenia
Slovak Republic
Portugal
Poland
Norway
New Zealand
Netherlands
Mexico
Luxembourg
Korea
Japan
Italy
Israel
Ireland
Iceland
Hungary
Greece
Germany
France
Finland
Estonia
Denmark
Czech Republic
Chile
Canada
Local Government Budget
• Property tax collection (recurrent taxes on immovable
property in 2012) is less than one-fifth the OECD average
with limited offsetting alternative revenue sources
3,5
3,0
2,5
2,0
1,1
1,0
0,2
0,0
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Turkey’s “Second Generation”
Urban Development Agenda
• A Focus on Second Tier Cities (mainly new Metropolitan Municipalities)
– They are growing the fastest
– Have new administrative and management responsibilities with less experience (new
water utilities, transport authorities)
• Reviving Urban Planning
– Provide best practice international experience in land-use/transport planning with
associated links to housing provision, building rural-urban linkages
• Scaling-up Urban Transport & Expanding Energy Efficiency Options
– Shift from overreliance on private vehicles and coordinate private transport services
within public transport systems
• Fostering more participatory engagement with citizens
– Urban transformation involves potential economic gains with also potential social costs
• Promoting increased local own source revenue mobilization
– Proposing shift of property tax collection to Metropolitan Municipality Level
• Establishing Inter-Agency Policy Coordination Mechanisms
– Recent formation of Housing Commission is an example of good practice, need solid urban
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data collection & monitoring system
Some Key Challenges to Be Addressed
Urban and Transport Planning
• Weak city planning mechanisms, tools and outcomes. Metro Municipalities need
to push for transit-oriented development (transport planning focused on the
backbone of the city transit system linking labor and housing markets with access
to commercial areas).
This should be coupled with broader-based and more comprehensive urban
planning (not just structural plans). This would allow for the provisioning for
growth in population, adjusting density gradients, curbing uncontrolled expansion
and addressing associated land/housing and service needs.
Urban data/information collection and monitoring systems
• There is no systematic collection of urban data at the city level or nationally. This
renders monitoring of KENTGES implementation a key challenge. An Urban Data
System is an urgent need to better inform policy decision making, implementation
and monitoring of KENTGES, and improved outcomes on the ground.
•
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Some Key Challenges to Be Addressed: Contd..
Financial Planning & Budgeting
• Very little budgeting is linked to capital investment planning (e.g. initial
problems with metro expansions in Ankara and Izmir) or the ability to
answer questions about cost recovery and adequacy of pricing for public
systems (full cost pricing), i.e. public transport
• Focus on revenue enhancement by improving local revenue mobilization
and introducing new tax instruments, e.g. use of development levies (TIF)
to improve value capture of increasing land values
• Strengthen tax administration; improve management of collectibles and
arrears; expand access to long-term finance and shift accumulating shortterm maturities
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Sustainable Cities Project
Core Features:
• Offer Policy Instruments that link city planning and capital investments to
national policy objectives -- Green Growth, National Urban Development
Strategy (KENTGES), Energy Efficiency in Buildings Law, Metropolitan
Municipality Law using a Sustainable Cities Action Plan Framework
• Devote substantial resources to improving territorial planning at the
provincial and city level (Iller Bank and policy coordination with MOEU, MOD)
• Build city-level and national aggregate Urban Information Platform to allow
monitoring of city development, establishment of baselines, benchmarks and
performance targets (MOEU)
• Project will target second-tier Metropolitan Municipalities where
demographic and economic growth is the strongest.
• Promote greater energy efficiency, conserve water by reducing NRW losses,
expand wastewater treatment, reduce urban congestion, promote financial
cost recovery, enhance disaster resilience.
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Sustainable Cities Project
Project Components:
• Component 1: Sustainable City Planning and Management Systems
–
–
–
–
Support for Territorial Planning following shift to Metro Municipalities
Policy level and framework designed with MOEU, MOD, and Iller Bank
Implementation by Metro Municipalities with Iller Bank and World Bank oversight
Plan preparation/updates promoting sustainable urban mobility, environmental
planning, infrastructure and housing surveys, GIS systems, Capital Investment Planning
• Component 2: Municipal Investments
– Water and sanitation networks and WW treatment systems
– Urban Transport: Low carbon/green Bus Rapid Transit, Green Wave, Trams and
Integrated Bus Routes
– Solid waste management: Landfills, recycling and methane gas capture
– Energy Efficiency investments: green municipal buildings, street lighting
• Component 3: Project Management and Institution Building
– Develop Sustainable Cities Diagnostics and Technical Know-How with Iller Bank
– Support for national Urban Database and city level data collection and monitoring
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Thank you!
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