Urban Growth, Inequality, and Telecommuting

By Xenia Dormandy

Among other issues that the NIC Global Trends 2030 effort highlights is the rise of inequality associated with urbanization. There are some aspects of this that add more complexity to the urbanization debate that could lead to slightly differing outcomes from those typically considered.   

We often focus principally on inequality between states.  According to various sources including the World Bank and the UN, the Gini coefficient (a measure of inequality in which 0 indicates full equality (everyone holds equal wealth or income) and 1 full inequality (one individual holds 100% of the country’s wealth or income)) of many countries, including the US, China and India, is rising.  However, as urbanization and the Report make clear, inequality is also significant within states. As inequality between states could lead to inter-state conflict, so too can inequality within a state lead to intra-state conflict. 

The consequences of this are increasingly apparent around the world. For example, the Occupy Wall Street movement in the US and the demonstrations over the past 18 months in Spain and Israel were about fairness (or the perceived lack thereof). The Arab Revolutions in Tunisia, Libya and Egypt last year were in large part about jobs, corruption, and equal opportunities. One of the greatest drivers of instability in the future decade is going to encompass this belief of growing perceived inequality. It is even playing a role in the current US election with much debate around President Obama’s push for ‘fairness’ though such initiatives as the Buffett rule.

The impact of this perception of inequality (including that between the urban and rural sectors) is magnified by the concurrent expansion in communications channels and information exchange. As never before those in the lower economic brackets are able to see and understand how the other half live. Whereas this information used to be unavailable or small leaks could be argued away, today the plethora and diversity of information sources all sending similar messages makes it impossible for wealthy elites to counteract. Again this is true both at a state to state level (e.g. for the North Korean government to suggest its standard of living is the same or above that of South Korea) and within a state (e.g., for Beijing to convince its population that there isn’t corruption in the system while the children of Chinese elites live a high life in the West as in the recent case of Bo Xilai’s son, Bo Guagua).

At the same time as these technological advances lead to more transparency, they also have another impact directly relevant to the urban/rural divide. This relates to the trend towards telecommuting. As statistics from Global Workplace Analytics show, in recent years there has been a significant upswing in telecommuting in the US (and perhaps elsewhere). Increasingly white collar workers are choosing to work from or near their home rather than commuting into the center of cities. New businesses have started up that provide offices for workers from different companies to come together and from which they can telecommute.

This trend, if it continues, could somewhat mitigate both the increasing urbanization (with all the associated costs that Drew Erdmann mentioned in his earlier blog) and the concurrent inequality rise between urban and rural populations.  As more (relatively) wealthy individuals choose to live and spend time on the outskirts of cities or even in rural areas, working from there, they will invest more in these areas so bringing economic benefits.  As communications technologies continue to improve and become cheaper, from conference calling to Skype to personal videoconferencing, this could have an impact on these other trends of rising inequality and urbanization and make less stark the consequences of the rural/urban divide.

 Xenia Dormandy is a Senior Fellow at Chatham House in London.

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