Urban Governance and Development of Informality in China and India

Abstract

This chapter contrasts the process of urbanization in China and in India. It characterizes the differences in outcomes with regard to the provision of urban infrastructure and the development of informality in each country. The role of local autonomy and governance structures help to explain extraordinary differences in per capita levels of infrastructure and in levels of informality in urban real estate and labor markets. In China, incentives for local urban growth, combined with the practice of Hukou — household registration permit limiting access to the rapidly developing cities — has resulted in massive growth of a formally housed new urban middle class but with important social and environmental limitations. In India, on the other hand, urbanization, although slower, occurs outside of formal institutional processes without adequate financing and delivery of public goods and services, resulting in large-scale informality. The chapter concludes with a comparison of the challenges faced by China and India in managing their continued urban growth.

Keywords: Urbanization; China; India; Urban Governance; Informal Markets; Comparative Urban Development

JEL Classification: O18; O21; R14; R21; R51; R52