Evidence shows agglomeration economies have indeed played out and translated into significant productivity enhancements and strong economic performance.
" The trend of increasing urbanisation certainly bodes well for the region’s longer term economic prospects.”
Moreover, ANZ Research contends the pace of urbanisation will be faster than the median estimates from the United Nations.
The recent intensification of relocation of manufacturing facilities out of China and the associated reorganisation of regional supply chains will play a role in catalysing the industrialisation process and thereby urbanisation. This bodes well for the economic prospects for the regional economies and also provides governments with an active policy tool.
There is ample potential for these economies to continue to enjoy the productivity gains from urbanisation. The challenge for governments is to synchronise urban planning nationally and integrate aspects of economic policy, infrastructure development, connectivity and human capital investment in their design.
The trend of increasing urbanisation certainly bodes well for the region’s longer term economic prospects. Promoting urbanisation could hold the key to sustaining economic performance. The benefits of urbanisation are, however, not automatic. Combating its negative externalities will remain a policy challenge.
The economic structure of the Greater Mekong region has undergone a significant change in the past two decades. Traditionally characterised by a large agrarian base, economies in the region now generate 25 per cent or less of their gross value added (GVA) from the agriculture sector. Furthermore, agriculture engages less than 40 per cent of the workforce in Thailand, Vietnam, and Cambodia.