Developing economies should seize the opportunity presented by the convergence of two forces — rapid urbanization and technological innovation.


The term “developing economy” suggests a constant state of pursuit. Yet two key forces under foot, dubbed “megatrends” by PricewaterhouseCoopers, hold the potential to create a more level playing field with advanced economies — rapid urbanization and the astounding pace of technological advance.

From Big Data to smart printing, people now have access to tools that make it easier than ever to do business. Similarly, rapid urbanization is enhancing the importance of cities. Cities now represent 50 percent of the world’s population and consume 75 percent of its resources, making them the hubs of the global economy.

As developing countries consider how to spur growth and alleviate poverty, both of these trends should be at the center of their strategies. Technology has opened the door for entrepreneurs from around the world. Small companies can now become integrated into global supply chains and compete with those in more developed countries.

Cities can serve as the incubators for these entrepreneurs. They have the highest concentration of economic opportunities, and municipal leaders have the power to act decisively to improve the atmosphere for entrepreneurs. The mayor of Mexico City, Miguel Mancera, recently entered into the Global Cities Economic Partnership with Chicago Mayor Rahm Emanuel. This innovative deal — which focuses on shared industry specializations, joint investment and research collaboration, demonstrates the potential for cities to lead on global cooperation.

Another model is the Enterprise Cities (E-Cities) Project, which is run out of Babson College. Working with local leaders, the initiative creates autonomous regulatory zones aimed at fostering competition and entrepreneurship within countries. By creating a level playing field and a regulatory environment favorable to competition, E-Cities enable individual firms and entrepreneurs to determine how best to take advantage of an opportunity — creating jobs and an economic ripple effect in the surrounding community.

The E-Cities model has applications throughout the developing world. Indian Prime Minister Narendra Modi just launched the 100 smart cities initiative in an effort to spur the kind of development that would allow India to come of age as an economic giant. The E-Cities model — with its public-private partnerships and investor-friendly regulations — could help accelerate an initiative like this, allowing India to take advantage of its comparative advantage in IT, while alleviating some of the regulatory constraints that restrain India’s growth.

By harnessing the confluent forces of urbanization and technology, governments like India’s have a huge opportunity to improve their citizens’ livelihood through commerce. The Copenhagen Consensus — a Danish think tank that studies the impact of development funds — noted that commerce is one of the best ways to alleviate global poverty; China and Vietnam, for example, have raised much of their population out of poverty over the past 30 years through jobs provided by global commerce.

As new trends emerge and shape the world, the principles that once guided our thinking will no longer be relevant. To adapt, governments will not only have to be nimble, they will also have to be willing to experiment with new ideas. Cities will play an integral part in this by encouraging entrepreneurs to capitalize on the technological advances.

(Top image: Courtesy of Thinkstock)

This piece also appears in Republic 3.0.

Francisco J. Sánchez is the Chairman of CNS Global Advisors. Prior to CNS, he served as Under Secretary for International Trade at the U.S. Department of Commerce. During the Clinton Administration, Sánchez served as the Assistant Secretary for Aviation and International Affairs at the U.S. Department of Transportation. He previously served as a Special Assistant to President Clinton and as Chief of Staff to the Special Envoy to the Americas.