The author explains what India can learn from Detroit

On July 18, the city of Detroit declared bankruptcy in the largest such filing in US history. Its population has dropped from a peak of 1.8 million in 1950 to less than 0.7 million, and its once-proud factories lie abandoned. Yet, we live in the Age of Cities. More than half the world's population is urban for the first time in human history and urban clusters account for an estimated 80 per cent of the world's gross domestic product. These proportions will rise as countries like India urbanise. So, why did Detroit fail in a world that loves cities, and despite the huge subsidies provided to it over the decades? What can a rapidly urbanising India learn from this experience?

First, we need to understand what drives 21st-century cities. As recently as the 1990s, many "experts" were of the opinion that technology would make cities irrelevant in the 21st century. It was believed that the internet and mobile communications would make it unnecessary for people to live in crowded and expensive urban hubs. Yet cities have boomed, and super-expensive cities like New York and London have revived after decades of decline.

Such regular cycles no longer apply to post-industrial cities. In the course of a workday, people routinely mix and match many activities - they may work at their desk but they may meet a friend for lunch, go to the gym, do chores, travel on business, shop online and so on. Similarly, time at home is no longer clearly demarcated - people work online or make conference calls even as they go about their family life. We have discovered that this life of multitasking and mix-and-match is best done in cities that concentrate a multiplicity of hard amenities such as airports, shops, schools, parks, theatres and sports facilities as well as soft amenities such as clubs, social communities, bars and restaurants.

Another factor is that cities have increased in importance as hubs for innovation and creativity. Till the 19th century, innovation was done mostly by generalists and tinkerers, and this meant that the accumulation of new knowledge was slow but its application across different fields was quick. In the 20th century, knowledge creation became the job of specialists that sped up knowledge creation within silos but retarded interdisciplinary application. Recent studies have shown that this source of innovation is rapidly decelerating (the productivity of an American R&D worker may now be less than 15 per cent of a similar researcher in 1950). Instead, innovation is increasingly about mixing and matching knowledge from different silos. Certain cities are ideally suited for this as they concentrate different kinds of human capital and encourage random interactions among people with different knowledge and skills.

The problem with this post-industrial urban model is that it strongly favours generalist cities that can create an ecosystem that clusters different kinds of soft/hard amenities and human capital. Indeed, the growth dynamic can be so strong for some successful cities that they could hollow out smaller rivals (for example, London vis-à-vis the towns of northern England). Some specialist cities could also do well in this world but, as Detroit demonstrates, it is clearly a danger for cities that are dependent on a single industry or on a temporary location advantage.

The rapid downward spiral of Mexico's northern towns shows that developing economies are not immune to the phenomenon. China, too, will have to deal with this problem. Over the last two decades, the big, cosmopolitan cities of Beijing and Shanghai have grown dramatically - but the bulk of urbanisation has been absorbed by cookie-cutter small/medium industrial towns. By clustering industrial infrastructure and using the Hukou-permit system, the authorities have been able to guide the process surprisingly well.

However, this process of urban growth is about to unravel. As China shifts its economic model away from heavy infrastructure investment and bulk manufacturing, many of these small industrial cities will lose their core industry. The post-industrial attractions of cities such as Shanghai and Beijing will attract away the better educated and talented children of today's industrial workers. This will happen at a time that the country's skewed demographics will cause the overall workforce to shrink. In short, China will soon have to worry about the "Detroit syndrome".

One could argue that India is too early in the cycle to worry about all this, but the phenomenon can arrive sooner than one expects. Detroit's boom years lasted half a century, but China's industrial towns will be dealing with it after just two decades. Moreover, as the socio-economic unraveling of Kolkata demonstrates, the problem can arrive early in the cycle and can be very difficult to reverse (it would be fair to say that the bulk of Kolkata's erstwhile middle-class has moved to other Indian cities like Delhi, Gurgaon and Bangalore, or has moved abroad).

Whenever I discuss urbanisation with Indian policy makers, the discussion almost always focuses on how to create cookie-cutter mass housing for new migrants and on the need to create heavy transportation infrastructure to take them back and forth from their place of work. This is needed, but we should also think about creating vibrant urban cores that can survive industrial cycles. This requires investment in soft infrastructure for entertainment and leisure, building social/intellectual institutions, making space for festivals and religious activity, conserving natural and historical heritage and so on.

A concrete example would be to encourage new universities in the middle of new cities rather than in remote gated campuses. This would be an easy way to ensure the constant flow of young people to the urban core. Indian urban planners and policy makers tend to see such thinking as elitist, but the poor of Detroit will remind them that it was they who suffered the most when their city lost its vibrancy.