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Why are Latin American and Caribbean cities less productive? Mayors in Miami to discuss

People jostle with traffic on a crowded street in Buenos Aires. Making Latin American and Caribbean cities more productive is key to the region's economic development.
People jostle with traffic on a crowded street in Buenos Aires. Making Latin American and Caribbean cities more productive is key to the region's economic development. Courtesy World Bank

Almost three-quarters of the population of Latin America and the Caribbean live and work in cities, which traditionally have been hubs of economic activity, entrepreneurship and innovation.

Despite 433 million people living in the region's 7,197 cities, a new World Bank study finds that urban areas in Latin America and the Caribbean are near the world average in terms of productivity but still fall behind cities in the United States and Europe. Why, for example, is Chicago more productive than Bogotá when they have similar populations of about eight million?

The study, Raising the Bar for Productive Cities in Latin America and the Caribbean, explores the reasons for such disparities and whether there are fixes that can boost urban productivity and harness it to reignite economic growth in the region. The countries of the region "cannot be productive unless their cities are also productive," the study says.

About 600 mayors and council members from throughout Latin America and the Caribbean have come together in Miami this week to discuss the issues raised in the study, which was presented Tuesday on the opening day of the Inter-American Conference of Mayors. The three-day conference is being held at the Hilton Miami Downtown Hotel, 1601 Biscayne Blvd.

A panel that included Miami Mayor Francis Suarez; Mayor Mario Ferreiro of Asunción, Paraguay; Jorge de la Roca, a University of Southern California urban economics professor; Maria Marta Ferreyra, World Bank senior economist and lead author of the study; and Allan Rosenbaum, a Florida International University professor of public policy and administration, discussed future solutions for the region's cities .

The study, said Suarez, helped put his work as a mayor in perspective. He said Miami wants to build on its reputation as the port of the Americas and become a true global city. "Miami has positioned itself as an epicenter of global investment for many reasons," Suarez said. Among them, he said, is the city's relationship with Latin America and the Caribbean countries that "has brought us innovators, investors and business executives."

The conference, which is organized by FIU's Institute for Public Management and Community, also includes a tour of PortMiami and discussions on water security, climate change, citizen engagement, education, smart cities, using social media for public safety and emergency management, public services development and best practices.

High-rises jut skyward in Buenos Aires, but the region lags between the U.S. and Europe in terms of the productivity of its cities. Courtesy World Bank

Among the factors that make Latin American and Caribbean cities less productive than their U.S. and European counterparts are:

Lower education levels: Only 18 percent of individuals in the Latin American-Caribbean region have some higher education, compared with 59 percent in the United States.

Underdeveloped national transportation networks. In North America, the Asia-Pacific region, and Europe, 40 percent or more of surface freight is shipped by rail. In Latin America, only about 22 percent of surface freight is shipped by rail. Railroad networks and highway systems also are underdeveloped. The study found that the density of paved roads in the region has remained stagnant for the past four decades.

"The easier the flow of goods, resources and people across cities, the greater the contribution of cities to national productivity," said the study.

An unequal distribution of skilled labor. People with skills tend to be more concentrated in a few larger cities. That also results in income inequities because the large cities have a greater share of skilled, high-earning workers than the smaller cities. Further urbanization of unskilled workers may just shift them from agriculture to low-productivity sectors, the study said.

To overcome these challenges, the World Bank study argues that policymakers need to improve "the enabling environment" by modernizing infrastructure, investing in people by improving educational opportunities, making cities of all sizes attractive to skilled people, improving urban planning, and upgrading public services to relieve congestion and make cities more attractive to their residents.

After the collapse of global commodity prices during the first decade of the millennium many regional countries have experienced low, uneven growth in recent years. "Boosting productivity is critical to reviving economic growth in the region," the study said. "And the potential of that great engine of growth — cities — cannot be left untapped."

Follow Mimi Whitefield on Twitter: @HeraldMimi