Sustainable and inclusive growth: the role of cities

Conjoncture // December 2019  
Cities today concentrate more than half of the world population and more than 80% of global GDP. The underlying dynamics explaining  
their ever increasing importance are the result of a variety of positive externalities (thicker labor markets, knowledge spillovers, input  
sharing…) generating self-reinforcing effects. These rapid waves of urbanization have key implications for the production of goods and  
services, environmental quality and human development. The world is one of density spikes and disparities, driven by the unstoppable  
ascendance of metropolises. Greener and more inclusive cities should be promoted in order for them to remain livable. In this respect,  
public policies have an important role to play.  
By 2050, more than two thirds of the world population will be living in mechanisms underlying the formation and organization of cities is  
cities. Yet, in OECD countries, these metropolitan areas cover only 4% essential to grasp and tackle the resulting challenges.  
of land (OECD, 2015). Extreme geographical concentration is raising  
questions regarding the form that these new megacities should adopt to  
remain livable environments. Over-crowdedness, pollution and high  
Economies of scale and diseconomies inherent to cities coexist and  
entrench their existence. Krugman (1991), in his theory of New  
Economic Geography (NEG), sets forth the existence of co-occurring  
forces of agglomeration and dispersion. These provide the basis for the  
existence of core-periphery patterns in the distribution of economic  
activities. Core areas benefit from agglomeration forces and form into  
large cities. Dispersion forces limit city size and yield alternative places  
to cities, peripheries.  
costs are amongst the main downsides associated with life in the city.  
Climate change has had profound effects on urban areas with rising  
health risks and increasingly extreme temperatures.  
From the death of distance to industrial decline, cities have faced a  
multiplicity of challenges and many have pondered whether this form of  
spatial organization would subsist. The rise of globalization and of the  
New Economy have revived cities’ potential and propelled them to the  
forefront of the international economic scene. Self-reinforcing waves of  
urbanization are still ongoing today, mainly the result of positive  
externalities unique to cities.  
Agglomeration is first and foremost a concern for firms and is mainly  
analyzed through the prism of economic activity and production. Such  
advantages eventually pass onto workers and consumers who benefit  
from higher wages, increased employment opportunities, as well as  
greater choice due to product variety on the market. In 1920, Marshall  
outlined the three key drivers for co-location amongst firms, which are  
still relevant a century forward:  
With more efficient, more innovative and greener infrastructures, cities  
remain the place to be, so much that new rifts are forming between  
urban spaces and other territories. Not only have disparities intensified  
between successful metropolises and lagging places, but within cities  
as well. Urban areas’ exceptional strengths have proven impressive, but  
the associated benefits have been largely concentrated. It is essential  
that their organization be rethought in order to alleviate the risk of a  
rising territorial divide. Public policies have a double aim of stimulating  
urban strengths while at the same time minimizing the resulting  
Labor pooling: high labor market density allows for better  
matching efficiency between workers and firms;  
Knowledge spillovers: unintended positive externalities from  
scientific/technical discoveries stimulate the productivity of  
neighboring firms;  
Input sharing: the co-location of similar firms allows them to  
split the costs associated with intermediate goods and spurs  
the co-location of specialized firms producing these inputs.  
The focus should be put on adopting the right policies. Applying a  
standard model to city planning is a futile endeavor. Cities’ inimitable  
strengths must be stimulated to the end of a more sustainable and  
inclusive development. Time has come to encourage a transition  
towards greener, more accessible and more affordable metropolises.  
To feature all three criteria necessitates a clustered organization of  
space, which cities provide. Urbanization takes place primarily to exploit  
the positive externalities associated with geographical proximity.  
These externalities can be classified into two types that are  
simultaneously drivers and consequences of city size. Marshallian  
externalities, also known as localization economies, are characterized  
As cities are spikes in the spatial distribution of individuals, economic by a phenomenon of specialization within a given spatial area. The co-  
activity, innovation, emissions and many more, they are, by definition, location of firms pertaining to one specific industry allows for knowledge  
unequal. Yet, the process of urbanization is only gaining momentum, spillovers among similar enterprises, resulting in an overall productivity  
exacerbating associated regional disparities. Understanding the increase. Jacobsian externalities, also called urbanization economies,  
Conjoncture // December 2019  
imply benefits from a process of diversification. The heterogeneity in  
industries present in the city allows firms at early stages of development  
to find their optimal production model and to benefit from solid and  
diversified infrastructure foundations. These two types of externalities  
require different levels of clustering and thus have different implications  
for city size. As figure 1 demonstrates, localization economies are  
features of smaller cities as they rely on less concentration amongst  
firms and workers. Urbanization economies, because of the diversity of  
local actors engaged in the process, are characteristics of much larger  
cities. As these dynamics are self-reinforcing, the presence of one or  
the other anchors city size.  
The rent gradient  
Alonso-Muth-Mills model  
Increase in  
city population  
Urban rent  
Agricultural rent  
Marshallian and Jacobsian externalities and city size  
Distance from  
City edge  
City edge'  
M : Large localization  
Figure 2  
Source: O'Sullivan, 1990  
L : Large urbanization  
Fixed utility: 푉(푧, ℎ)  
Budget constraint: 푤(1 − 푡푥) = 푧 + 푃ℎ  
푧 = 푤 − 푤푡푥 − 푃ℎ  
∆푃ℎ + 푤푡∆푥 = 0  
∆푃ℎ = −푤푡∆푥  
S : Small  
with  a numeraire good (fixed),  city wage (fixed),  transport costs (fixed), 푥  
distance from city center, rent and housing units (fixed)  
The slope of the rent gradient is  
, which implies that longer  
Number of workers  
commutes are capitalized into housing prices  
Figure 1  
Source: O'Sullivan, 1990  
If there is an increase in population (N), it raises the rent gradient everywhere  
and increases city size.  
Source: O’Sullivan,1990  
The inverse-U-shaped conceptualization of utility in cities (cf. figure 1) is  
the result of existing tensions between the positive externalities laid out  
above and the negative externalities that originate from urban  
formations. While the clustering of activity provides numerous  
advantages for both firms and workers, there are associated costs,  
known as dispersion forces in Krugman’s NEG theory.  
While the monocentric city model has a great explanatory power, its  
applications to real life seem limited by the rise of polycentricism. In  
today’s cities, there often exist multiple CBDs each attracting a distinct  
labor pool, based on location considerations. Such an organization of  
the city has been increasingly promoted in order to diversify centers of  
job and value creation.  
As cities expand, a variety of disamenities arise. Pollution, congestion,  
increased competition, greater littering and noise are amongst the main  
negative externalities found in cities. Regarding inequalities, exclusion  
by costs of housing and amenities is amplified as cities grow and  
become increasingly dynamic. Put forward by Alonso (1964), Mills  
1967) and Muth (1969), the rent gradient theory models cities as  
French policies, with the aim of promoting a more polycentric and  
decentralized distribution of economic activity, have sometimes had the  
unintended effect of promoting urban sprawl and thus of reinforcing  
monocentricism. There is convincing evidence of such processes in the  
Paris-Ile-de-France region. Policies of villes nouvelles (new cities)  
starting in the 1960s had for main objective to limit urban concentration  
in large cities and hamper the expansion of already-metropolitan areas.  
Nine new cities were introduced, amongst which five were located  
within a 15-50 kilometer radius from Paris. While the policy aimed at  
giving autonomy to these new structures, it seems that, in practice,  
these cities have been overwhelmed by the spreading Parisian  
functions of rent, commuting costs and wage. This relies on strong  
assumptions such as fixed utility and income across the city, a  
monocentric model, and the exclusive location of jobs in the Central  
Business District (CBD).  
The model has key implications for the organization of cities as it  
predicts a decreasing rent gradient from the CBD to city edge  
compensated by increasing commuting costs as one moves further from  
the city center. An increase in city population leads to an increase in  
living costs as the rent gradient shifts out (cf. figure 2). City growth is  
thus, by nature, an exclusionary process.  
Conjoncture // December 2019  
agglomeration and absorbed part of its excess growth. Halbert (2006) produce fundamental research while labs and companies develop  
argues that this policy did not serve to slow down the rise in Paris’ associated market applications. A functioning cluster should ultimately  
dominance. Quite the opposite took place as the villes nouvelles host leading firms with innovation and exporting capacities.  
reinforced the monocentric nature of the Parisian agglomeration and  
The spatial organization of cities as well as the agglomeration  
were analogous to a phenomenon of urban sprawl at a very large scale.  
economies from which they benefit allows them to host clusters. Large  
Urban sprawl is a defining challenge for contemporary cities. As core metropolitan areas, benefiting from urbanization economies, act as  
metropolitan areas become too crowded, city expansion takes place incubators for the development of new products (Chinitz, 1961). As a  
further from the center into the suburbs and lower density areas. Lack of result, urban areas have been the main, if not exclusive, targets of  
transport infrastructure, as well as distance from core areas innovation policies in France. Starting in 2004, a competitive poles  
concentrating jobs, economic activity and public services, are among policy was initiated to promote the formation of clusters through the  
the main concerns associated to urban sprawl. Inefficiencies arise from implantation of specialized research labs near firms and the distribution  
foregoing optimal city size, beyond which urban diseconomies outweigh of subsidies for research and development (R&D). The goal of such  
the benefits. These processes are highly damaging, notably for policies was to discretionarily promote the natural features of clusters by  
environmental, efficiency and equity concerns.  
incentivizing the co-location of fundamental and applied market  
research production. While the policy has had positive effects regarding  
innovativeness in targeted places, it has been at the heart of criticism.  
This top-down initiative spurred excessive specialization within clusters,  
with implications for places’ adaptability to external shocks. According to  
a study by the CEPREMAP, a policy limiting the obstacles hampering  
the formation of clusters could have proven more efficient than one  
arbitrarily promoting their development (Duranton et al., 2008). The  
discretionary ranking of space is the implicit consequence of the theory  
of growth poles, which predicts that development will eventually spread  
to neighboring areas. Considering the still-uneven spatial distribution of  
economic and innovative activities in France, the theory’s applicability  
can be put into question. It rather seems that competitive poles have  
had the effect of creating a hierarchy within space, characterized by  
Garnier (1989) as the opposition between superstar cities and the rest  
of France.  
Agglomeration economies featured in cities imply a disproportionate  
localization of activity in metropolitan areas. Perroux’s (1981) work on  
growth poles has led him to the notable conclusion that growth does  
not take place everywhere at once. Such a disparate distribution of  
economic dynamism is exacerbated as societies progressively enter the  
New Economy era. Increased use and reliance on new technologies as  
well as a shift towards a more service-based economy have led to the  
revival of cities. Geographical proximity, allowing for face-to-face  
contact, provides basis for the production and exchange of highly  
technical types of knowledge.  
Clusters are defined as “a strong collection of related companies  
located in relatively small spatial areas” (Beaudry and Breschi, 2000).  
They benefit from localization economies within very specific sectors.  
The main underlying driver of a cluster is knowledge exchange and  
creation, which geographical proximity allows for. There are two main  
categories of knowledge: codified and tacit. Codified knowledge has a  
high cost of production, but a relatively low cost of transmission. It can  
easily be shared, no matter the distance between the two firms. On the  
other hand, tacit knowledge has a high cost of production and a high  
marginal cost of transmission. Sharing it necessitates face-to-face  
contact (Storper and Venables, 2004). While it has been widely argued  
that information and communication technologies (ICTs) would imply  
the death of distance (Cairncross, 1997), this dichotomy in knowledge  
types serves to explain the resilience of cities. As the production and  
exchange of tacit knowledge requires spatial proximity, it is a key driver  
of the existence of clusters and of their ever growing importance.  
A study by the French National Institute of Statistics and Economics  
Studies (INSEE) finds the determinants of innovation at the regional  
level to be size, partnerships, public financial support, a skilled labor  
force, geographical proximity, and the scope of the market (Buisson,  
012). Both internal capacity and external connectivity define the  
innovative potential of a location. Phenomena of cathedrals in the  
desert, a term coined by Lipietz in 1980 to designate isolated poles  
lacking external linkages, highlight the need for locations to not only  
focus on their internal features. However, on the other hand, a study by  
Delaplace in 2012 on French high-speed trains (TGV) goes to show that  
external connectivity cannot improve a location’s attractiveness on its  
own either. New rail connections for small and medium cities have  
limited effects compared to larger cities. This results from usage  
potential, which is much higher in already-attractive places. Therefore,  
while external connectivity must not be overlooked, it should not be  
considered a means-to-an-end either in terms of attractiveness  
A cluster must feature specific characteristics in order to exist. Places  
should possess basic human and physical infrastructure, necessary to  
the production of ideas. This includes capital, technology and human  
resources. On the basis of these foundations should form a network of  
suppliers, featuring companies, specialized input providers, research  
labs and universities. This promotes public-private partnerships, and  
most specifically university-industry linkages whereby universities  
The case of the rehabilitation of a train station in Saint-Omer (France)  
goes to show the complementary nature between external linkages and  
internal innovativeness. The disused train station of Saint-Omer is to be  
put back into use as a way to promote the location’s attractiveness.  
Complementarily, this initiative projects to transform the train station into  
Conjoncture // December 2019  
a place of work and innovation. To do so, the station will feature 3,000  
square meters of collaborative space, a Fab Lab offering free training  
on digital tools and robotics as well as a business incubator, and a  
museum on digitalization. The “Station” project illustrates the  
possibilities cities can benefit from in the development of pools of  
innovativeness. Saint-Omer already possesses infrastructure Cities are amongst the main culprits when it comes to climate change.  
foundations and features a small agglomeration of people, with 56 trains While urbanization is extremely restricted in terms of global terrestrial  
passing by every day and more than 800,000 annual commuters (Allix, surface covered (~4%), cities still manage to consume 80% of global  
019). Local amenities and local actors should be rooted in energy and account for 80% of GHG emissions (World Bank, 2010).  
Phenomena of urban heat islands (UHI) are amongst the main  
illustrations of the impact of climate change on cities. Temperatures in  
cities tend to be higher than that in rural areas, with an extra 3.5 to  
development so as for initiatives to truly be location-appropriate.  
4.5°C, reaching up to a 10°C difference in larger cities (OECD, 2010).  
Natural processes of agglomeration paired with public policies These imbalances in temperature levels across urban and rural spaces  
promoting clustering have induced an intense polarization of space. are consequences of reduced areas covered by vegetation and water in  
Processes of desertification across regions, to the benefit of cities, have cities as well as the heat-trapping effects of high-rise buildings and  
exacerbated regional disparities in terms of production, innovation and asphalt roads. Unprecedented spikes in temperatures in the summer of  
employment. Skills have agglomerated within cities, attracted by the 2019 in France, reaching a record level of 43°C in Paris, are  
multiplicity of opportunities, dedicated infrastructures and co-location of materializations of the UHI effect. Warmer temperatures increase the  
innovative workers. The information economy has favored places with a concentration of air pollutants and exacerbate environmental damage  
high concentration of higher-education graduates, to the ultimate benefit and health risks. Furthermore, vicious effects are associated with UHI  
of large metropolitan areas (Davezies and Pech, 2014). The process of for city energy consumption, as warmer temperatures notably lead to a  
skill-biased technical change has thus instituted a polarized labor greater use of air conditioning. Energy, building and transport  
market within urban areas, with eventual repercussions on regional inefficiencies are key areas that must be targeted in order to make  
disparities. While new technologies are substitutes for semi-skilled labor, urban development more sustainable. Specific city planning decisions  
low- and high-skilled employments are harder to automate. As the can also be taken to promote less polluting forms of urbanization. Cities  
opportunity cost of high-skilled workers increases due to higher wages, have both the tools and the capacities to be leaders in the fight against  
household activities such as cleaning, maintenance, etc. are outsourced climate change.  
to low-skilled workers. Wages at the bottom of the distribution are thus  
increasingly linked to those at the top. This drives wage differentials  
upwards all along the income distribution in cities, exacerbating  
imbalances relative to non-urban areas.  
Cities have more leeway to become green poles and drivers of the  
ecological transition. As important polluters, a marginal decrease in their  
emission levels would have large effects on the overall environmental  
balance of a country. Cities consume 80% of the global energy  
production (World Bank, 2010); making energy use more efficient is a  
key lever to make cities more sustainable. Commercial and residential  
buildings, transport networks, waste management as well as public  
lighting are amongst the most voracious urban energy consumers. To  
tackle such issues, cities benefit from economies of scale. Doubling the  
population of any city requires an approximate 85% increase in physical  
infrastructure (electrical cables, water pipes, road surface…) according  
to a study by Bettencourt et al. in 2007. Larger and more developed  
cities can thus resort to proportionately smaller stocks of infrastructure  
and reduced energy use. Specific policies and city planning efforts are  
needed to exploit such economies of scale.  
While the classical rural-urban opposition has put great focus on  
regional disparities, issues of within-city inequalities are increasingly  
becoming a concern. With two thirds of the households below the  
poverty line living in urbanized areas (Aerts et al., 2015), French cities  
have seen the emergence of sharp inequalities. The clear-cut difference  
between low- and high-skilled workers has led to “sorting effects” as  
evidenced by Berkes and Gaetani (2019). High skilled-individuals co-  
locate near their work, which drives the costs of amenities up within  
these specific areas of the city. As a result, a process of income  
segregation takes place whereby high-skilled individuals further co-  
locate together and lower-skilled individuals are excluded from  
particular neighborhoods. Amplification effects relative to knowledge  
spillovers further reinforce the benefits enjoyed by the better-off parts of  
the city. Berkes and Gaetani (2019) find that approximately 20% of the  
rise in income segregation in US cities can be attributed to the rise of Regarding the building stock, there are many ways to go about to make  
innovation. Heightened mobility in cities has also served to exacerbate it increasingly environmentally-friendly. Promoting shallower building  
social segregation across neighborhoods of metropolitan areas. Modest forms for natural ventilation and daylight penetration can allow for a  
households are constrained to live at city edges where rents tend to be clear reduction in air conditioning and artificial lighting uses. Optimizing  
lower (cf. figure 2). Inclusionary zoning should be increasingly promoted glazing ratios can also have consequences for the minimization of  
to tackle such a disparate organization of space.  
energy demand. Studies show that in moderate climates, the window to  
Conjoncture // December 2019  
wall ratio should be of about 20%, whereas in hotter climates it is areas outside of Marseille has no access to public transports, 14% has  
recommended to be of 10% (Alwetaishi, 2017). Ratios tend to be quite limited access and only 2% has high access (Poelman and Dijkstra,  
low as larger windows can cause inefficient energy loss and excess 2014). There is a clear urgency to make public transportation more  
heat due to sunlight exposure.  
inclusive and efficient to face the realities of sprawling cities. Making  
cities denser and more connected can lead to a stronger reliance on  
public transports, and to shorter and faster commutes (OECD, 2012).  
Greater accessibility has clear benefits not only for sustainability, but for  
the promotion of agglomeration economies and the mitigation of  
inequalities too. Bringing individuals closer together intensifies the  
positive dynamism that cities benefit from while reducing their energy  
consumption bill.  
Building renovation is a requirement for any eco-city. In France, the  
government is aiming for its 35 million dwellings to be labeled Low  
Consumption Buildings (Bâtiment Basse Consommation). With 7.5  
million dwellings graded F or G today (the lowest grades on the energy  
performance scale), there is still a long way to go for the French building  
stock to become sustainable. The energy and climate law of 2019 has  
introduced an obligation for households to carry out improvement works,  
in order for all dwellings to reach at least category E on the energy  
performance scale by 2028. While the building stock is a key lever for  
the ecological transition, the timespan given to undertake the works as  
well as the envisioned sanctions for not respecting this obligation seem  
weak relative to the potential gains. These ambitions still transpire the  
increasingly central role that building efficiency plays in the fight against  
climate change. Urban areas’ building stocks are disproportionate  
compared to suburban and rural areas’, and detached housing tends to  
be more polluting than residential buildings. In addition, a study by  
Maury and Gilbert (2015) has revealed the existence of strong territorial  
Numerous distinct initiatives exist as part of the overarching goal of  
making cities less energy-voracious. City planning allows for the  
operation of these different levers as one. Traditional city planning has  
spurred urban sprawl, which has proven to be largely incompatible with  
more productive, more innovative and more sustainable forms of  
urbanization. Reversing such trends necessitates the promotion of a  
denser way of life. Compact cities have recently emerged as the  
archetype of the sustainable city. They feature high residential density,  
mixed land use as well as better accessibility by public transport. A  
compact city does not necessarily mean a small city: this type of  
development promotes higher density rather than a more dispersed  
development as a response to increasing population levels. A compact  
city does not imply a monocentric model either: polycentricism and  
compact planning are largely compatible for as long as the distinct  
centers are effectively linked together by efficient modes of public  
inequalities in terms of energy poverty and energy vulnerability , which  
touches 22% of the French population. As territories are located further  
from urban poles, the risk of energy vulnerability increases, reaching a  
maximum of 9.5% in rural areas fully isolated from all urban influence,  
3.5 times higher than the national average (Davezies and Rech, 2014).  
Building sustainable dwellings requires locating them where they will do  
the least ecological harm. Home to more efficient dwellings, cities have  
the potential to act as leaders for a greener way of life.  
Another key infrastructure on the path toward greener cities is  
transportation. Considering cities’ range of choices in terms of transport  
options compared to suburban and rural areas, they possess much  
greater leeway to promote sustainable mobility. Private vehicles  
consume twice the energy per passenger per kilometer of a train and  
almost four times that of a bus (Steemers, 2003). Greater incentives for  
public transportation use at the expense of private vehicles thus have  
great implications for overall energy consumption and emissions.  
Making transport networks more efficient in terms of connectivity, speed  
and costs to incentivize city residents to favor shared rides to private  
ones is in the hands of cities. In the absence of such an efficient public  
transport system, increasing city population and city size will only  
increase traffic and pollution. This constitutes one of the main  
challenges associated with urban sprawl. In 2018 in the Paris  
agglomeration, daily commutes by car reached 0.4 million within the city  
center, 3.3 million within the inner suburbs and 8.5 million within the  
outer suburbs (OMNIL, 2019). In the case of the Aix-Marseille  
metropole, approximately 77% of the population living in suburban  
Mixed land-use implies the co-location of residential and commercial  
activities with green spaces and offices. Such a combination allows for  
mixed energy demand, which tends to avoid spikes in consumption  
within the city and to preserve urban open spaces. Better access to  
amenities promotes face-to-face contact between individuals and limits  
residential segregation relative to income or work activity. More efficient  
and developed transport networks, as well as limited amenities for the  
use of private vehicles incentivize heavier reliance on shared  
transportation modes. Empirical evidence has further demonstrated that  
central cities that limit traffic tend to be economically better-off than  
those with generous parking (Kenworthy, 2006), the main explanation  
being the attenuation of issues relative to pollution and congestion.  
Compact city planning exploits the economies of scale from which  
urban areas can benefit as the construction and maintenance of  
infrastructures, such as water supply, drainage, roads, buildings and  
public transport, use less energy than in a more dispersed setting. By  
limiting urban sprawl, the compact city also limits soil erosion and  
losses in biodiversity. Denser cities preserve green spaces within and  
outside urban areas, restricting the transformation of agricultural areas  
into new components of the city. In the case of the Ile-de-France region,  
the Schéma Directeur de la Région Ile-de-France (SDRIF) has adopted  
a compact logic. Urban development is incentivized to favor places  
already served by public transportation to further reinforce existing  
density and connectivity. The scheme also requires municipalities to set  
Loi du 8 novembre 2019 relative à l’énergie et au climat  
Loi du 12 juillet 2010. Energy poverty: “situation in which an individual  
struggles to acquire the necessary energy supply to meet basic needs, due to  
inadequate resources or housing conditions”  
Ducharne and Van Lu, 2019. Energy vulnerability: “situation in which a  
household spends at least 8.2% of its disposable income on energy expenses  
for its dwelling, corresponding to twice the metropolitan median”  
Conjoncture // December 2019  
density targets. The goal is to limit the expansion of built infrastructures  
onto the region’s preserved open spaces.  
Compact cities, while extremely attractive in theory, have faced  
challenges in practice. Accessibility and livability concerns are amongst  
the most prominent issues. Regarding accessibility, the rent gradient  
theory (cf. figure 2) predicts that higher density and higher population  
levels will yield higher rents in all parts of the city. Inclusivity is  
challenged as fewer individuals can access urban areas and their  
amenities. In terms of livability, strong proximity reduces privacy as well  
as the availability of open and green spaces. These issues constitute  
the compact city paradox, which lays out that to be sustainable cities  
must be highly dense, but that to be livable, cities should be more  
dispersed. Once again, cities are trade-offs from which result their  
optimal size and density levels. In order to reach this equilibrium,  
however, it is essential to limit urban inefficiencies. Better connectivity,  
more efficient land-use and lower energy consumption make up cities’  
improvement potential. Cities can be leaders in the energy and  
While processes of urbanization have been extremely beneficial in a  
multiplicity of sectors and for a great number of individuals, issues of  
within-city inequalities and regional disparities nuance this picture.  
Metropolitan areas’ forces of attraction have resulted in a strong  
concentration of production, innovativeness, employment and human  
resources, but also of public services, proximity equipments and digital  
access infrastructures. This form of territorial organization has spurred a  
rift between urban spaces and others. In this respect, the OECD has  
recently insisted on the need for efficient public policies to “make cities  
work for all” (OECD, 2016).  
ecological transitions, and it is at their scale that efforts should be Social movements in several cities around the world are evidence of the  
new geography of discontent. Coined by McCann in 2016, this term  
refers to the geographical breakdown whereby multiple places that have  
faced stagnating or even declining growth hold resentment towards  
successful locations that have flourished. While manifestations of this  
discontentment have strong economic roots, they are also deeply driven  
by growing territorial divides.  
In the continuation of the compact city model, smart cities have  
emerged as modern and connected forms of urbanization. They rely on  
the use of ICTs in order to ameliorate the quality and efficiency of urban  
services at a limited cost. Centralized collection of data is used to  
improve and tailor urban services to local needs in real time. Multiple  
initiatives have blossomed around the world. The case of Issy-les-  
Moulineaux in France is of great interest considering the fast  
digitalization of the city. Issy-les-Moulineaux first adopted a compact city  
model with a mixed use of land for housing, commercial areas, green  
spaces and offices. As a way to further limit congestion and pollution,  
underground connected systems of waste management have been put  
in place in order to replace garbage trucks. Energy management has  
been centralized and the use of new technologies has allowed for a  
smarter distribution of electricity across the city. This avoids spikes in  
consumption as energy production is tailored to energy needs in real  
time. Captors have been installed throughout the city for street lighting  
to instantaneously modulate supply based on the presence of vehicles  
and pedestrians, and for available parking spots to be catalogued and  
In France, the Institute for Public Policies has analyzed the social  
movement’s patterns with regards to territorial variables (accessibility,  
mobility, average distance between home and work). Their results show  
that issues of accessibility are strongly correlated to mobilizations, both  
online and in-person (Boyer et al., 2019). This further conveys of the  
mobility-hampering nature of commuting times.  
Phenomena of spatial mismatches between home and work reinforce  
concerns of accessibility and income segregation. Employment is highly  
concentrated in cities, and even more within specific neighborhoods.  
While Paris counts 1.76 filled jobs per worker, this number drops to 0.97  
in the inner suburbs of the city and to 0.75 in the outer suburbs  
Gobillon and Selod, 2004). Distance from the CBD is negatively  
correlated with available information on vacancies (Rogers, 1997) and  
positively correlated with costs of job search (Ortega, 2000), which  
serves to explain weaker access to the labor market as one moves  
further out. This is amplified by insufficient connections of suburban and  
rural areas to the city center by public transportation as well as the  
difficulties for individuals with weaker incomes to afford a car (Gobillon  
and Selod, 2004).  
booked ahead on a mobile phone application .  
Cities are the perfect locations for the development of such solutions  
thanks to strong innovative capacities and economies of scale in  
infrastructure production. In the case of the Paris-IDF region, Cap  
Digital and Advancity have joined forces to become a key actor on the  
European stage for the development of the city of the future. With more  
than 800 start-ups and small and medium enterprises, 70 research labs,  
schools and universities, and the involvement of 8 local governments,  
the cluster promotes R&D for more sustainable, inclusive and livable  
As one moves out of cities, rich places tend to rarify and poorer areas  
become more numerous (Maurey and de Nicolay, 2017). While it had  
long been considered that urban wealth and development would ‘trickle  
down’ to the rest of the territory, it has now been widely observed that  
regional disparities have persisted and have even intensified with  
globalization and the rise of ICTs. Improving accessibility to successful  
places and stimulating local endogenous development are instrumental  
in integrating forgotten territories in the general process of growth.  
Conjoncture // December 2019  
Providing these territories with the necessary linkages to have access to  
cities will improve their physical mobility, with direct repercussions on  
social mobility. This has implications for the management of rail  
transport networks as location can ultimately become a burden.  
Territorial determinism should be addressed by public policies. Further Large cities have the potential to become leaders of the ecological  
to physical mobility, isolated places must also enjoy their own amenities transition. Similarly, cities can review their functioning so as to  
in order to be successful, livable and increasingly self-sufficient. Several contribute to the reduction of territorial inequalities. Urbanization can  
initiatives have been instituted by the French government, but in a become a beneficial process for individuals in general, irrespective of  
number of areas little progress has been made.  
their location. Accessibility concerns have been widely addressed and  
are essential to tackle for all dwellers to have equal access to urban  
amenities and opportunities. A more inclusionary zoning would enable  
households, irrespective of their income, to locate in cities productive  
and well-connected areas. Housing policy thus emerges to be highly  
complementary to transport policy.  
France’s High Speed Plan (Plan France Très Haut Débit), initiated in  
013, has been deemed crucial to tackle the growing digital divide: it  
aims at providing very high speed coverage to the entire country by  
022. Access to an internet connection and to mobile networks remains  
very porous in France, with the coexistence of white zones and highly  
connected places. Indeed, less dense areas benefit from a much Large cities suffer from an unbalanced housing market, where supply is  
weaker connection than do large cities (Monchatre, 2019). To reach its diluting and demand is high on a sustained basis (APUR, 2007b). The  
objectives by 2022, France’s High Speed Plan must however double situation is even more complex for modest households. In metropolises,  
hirings (Banque des Territoires, 2019). As administrative procedures demand for social housing is remarkably higher than in other types of  
are increasingly being digitalized as part of the Public Action 2022 places; for six demands there is, on average, only one attribution of a  
scheme , access to an internet connection is increasingly becoming a social dwelling (APUR, 2007b). In the case of the Paris-IDF region, 6%  
discriminatory factor feeding territorial disparities.  
of the municipalities, mainly located outside the city center, gather half  
of the regional stock of social housing (APUR, 2007a). Low-income  
individuals living in such types of housing are thus pooled together in  
segregated parts of the metropolis. This has strong implications for  
inequalities due to a combination of low mobility and alienation from  
pools of employment located in the city center (Guilluy, 2014). Social  
housing policy can thus have the unintended effect of further alienating  
individuals due to excessive spatial concentration.  
To a wider extent, overall access to public services has been highly  
uneven across different types of locations. Cities’ high density provides  
scale economies for the implementation of public services and their  
dwellers can thus benefit from easy access to such amenities. In small  
and medium cities the situation can be very different. For tackling these  
issues, the financial means of local authorities play a key role.  
Rodriguez-Pose and Ezcurra (2009) note that, in developed countries,  
fiscal decentralization has very promising implications for economic Tackling issues of low supply and of spatial concentration would make  
convergence. Public actions at the local scale allow public spending to the city more inclusive and more accessible to low-income households.  
better match the disparate needs of territories compared to top-down This would promote stronger social diversity within large cities and  
address issues of urban expansion. According to APUR (2007a), in  
building inclusive and sustainable social housing, city planners should  
resort to vacant housing and urban renewal. Higher density implies  
better access to labor pools for low-income individuals. The compact  
city model can thus enhance cities’ inclusivity as well as their  
sustainability if social dwellings are fully integrated to mixed land use  
planning efforts.  
More recent French policies are increasingly promoting bottom-up  
approaches and offering tailored support to local actors. As part of the  
Innovation Territories policy (Territoires d’Innovation), the Biovallée  
project in Auvergne-Rhônes-Alpes promotes transition solutions for  
rural areas. Developing local energy production, organic farming and  
training programs matching local needs in skills are amongst the main  
propositions made to innovate outside of city-clusters.  
Providing access to larger cities to different income groups through  
transport and housing policies is a key factor in providing equal access  
to opportunities. Further to hosting more jobs and more public services,  
metropolitan areas have clear benefits for upward social mobility and  
well-being. The density in social and educational supply as well as in  
job opportunities acts like social insurance for workers (Guilluy, 2014).  
The development of cities has spurred significant divergences between  
urbanized places and their neighbors. In addressing these, in France,  
an extensive focus has been put on successful places in hope that  
spillovers would flow onto surrounding populations, and top-down one  
size fits all policies have promoted a centralized approach to specific  
regional issues. Cities should continue to be promoted, but in redefining  
their potential, they can be turned into drivers of sustainability and  
Public policies should combine place-based and people-based  
approaches, in order to tap into lagging areas’ potential (Rodríguez-  
Pose, 2018) as well as give individuals the possibilities to move towards  
opportunities (World Bank, 2009). Lower mobility in European countries  
has exacerbated territorial inequalities (Rodríguez-Pose and Lee, 2013).  
Reversing this would greatly enhance cities’ potential as hubs of  
innovation, ecology and employment, while limiting resulting territorial  
Action publique 2022: target of making 100% of administrative procedures  
accessible online by 2022, including on smartphones  
Conjoncture // December 2019  
imbalances. This would contribute to a more inclusive growth.  
According to Maurey and de Nicolay (2017), achieving this goal  
necessitates a greater focus on the general welfare gains of public  
investments in infrastructures and transport networks rather than on  
economic profitability. Meanwhile, sustainability could become a key  
feature of modern cities if efforts were continued in terms of  
infrastructure renovation and compact and smart city planning.  
The author thanks Zoé Klein for her research on this topic during her  
traineeship at the Economic Research Department.  
Conjoncture // December 2019  
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