Jane Jacobs, a well-known urban studies expert, once wrote, "A metropolitan economy, if it is working well, is constantly transforming many poor people into middle class people, many greenhorns into competent citizens. Cities don't lure the middle class. They create it."
The urban middle class is a good thing. They are a key constituency for improved governance, for greater transparency and accountability from politics and government.They are also an essential ingredient for driving domestic demand. Consumption is a particularly urban-tinged story. Urban residents want to live the urban lifestyle.
In Thailand, urban residents have about twice as much income as non-urban residents on average. They also spend significantly more than their non-urban counterparts that earn the same income. Higher income consumers in urban areas are twice as likely to own a passenger car as their rural counterparts, and are about 50% more likely to own an air-conditioner, a microwave and a computer. Countries which will see rapid growth in the urban middle class - like China - are most likely to see sustained growth in domestic demand.
In Thailand, unfortunately, urbanisation is low and is stalling.
Thailand's urbanisation rate (its urban population as a percentage of the total population) is 31%, significantly below peers such as Indonesia (53%), Malaysia (71%) and South Korea (82%). More worrisome is that urbanisation has stalled, increasing by less than one percentage point between 2002 and 2009, compared to increases of over 7 and 8 percentage points in Malaysia and Indonesia, respectively.
Why? The short answer is that Bangkok really dominates the urban landscape, but is not growing. The second largest city in Thailand is only about 6% the size of Bangkok. In South Korea and Malaysia, by contrast, the second largest cities are 36% and 49% the size of their largest cities, respectively. While it may be hard for those of us mired in the congestion of Bangkok to believe, Bangkok also appears to have stopped growing since 2007. People had previously attributed this to the growth of (peri-urban) cities around Bangkok, i.e. people were just moving from Bangkok to its vicinity to take advantage of lower costs and the like. But what the latest available survey data indicate is that even the overall population in Bangkok and its vicinity (cities like Nonthaburi, Samut Prakan and Pathum Thani) appears to have shrunk by about 1% between 2007 and 2009. The above is in contrast with the top 10 cities outside Bangkok and its vicinity, which collectively grew by 17% during the same period.
The momentum of urbanisation is shifting towards cities outside Bangkok. Provinces which have seen particularly rapid growth in their urban populations include Songkhla, Nakhon Si Thammarat, Surat Thani, Ubon Ratchathani, Chon Buri and Nakhon Ratchasima.
