The Growth of Asian Cities
by Bindu N. Lohani
Last updated 20 July 2026
In Asia, cities are the backbone of economic growth and central to the effective running of the country. Asian cities in particular have achieved remarkable growth in the last couple of decades, by any standard. There have been several connected drivers that have fuelled this growth. For one, urbanisation brought more and better infrastructure that are vital for business and trade. Urbanisation also set the stage for enormous economic growth for Asian cities. Economic growth meant that more opportunities for employment were available for millions of people, thus reducing the absolute levels of poverty in many cities, as well as the developing country as a whole. In Asia, agriculture-based economies like India have transformed into industrial and service-oriented economies within a span of thirty years, which is half the time it took for economies in large western countries.
The rapid economic growth and urbanisation of Asian cities is expected to continue over the next two decades. As Asian societies and Asian people change their lifestyles, culture and social structures, it is important to keep in mind that cities are, after all, built on natural ecosystems. The soil beneath the concrete buildings, the streams flowing beneath the asphalt roads and the vegetation alongside buildings are all essential parts of a city's infrastructure. Environmental sustainability should be at the heart of urban management.
THE IMPORTANCE OF ASIAN CITIES
To put into perspective, Asia was predominantly rural in the mid 1960s, with a population of about 1.7 billion, of which only 20% lived in cities. Since then, there has been a massive increase in the number and proportion of Asians living in cities. It is estimated that by 2030, 55% of the regional population will be living in cities.1 Currently, some 40 million people are being added to Asia's urban population every year, which is equivalent to 120,000 people a day. The trend is expected to continue. Furthermore, we in Asia have witnessed the emergence of very large urban areas, the megacities, with populations of 10 million or more. It is estimated that by 2010, 14 of the world's 25 megacities will be in Asia and most will be in the developing countries in Asia. In addition to the megacities, a significant portion of the population will be living in thousands of towns and cities throughout the region where there could be between 50,000 to 10 million people in these towns and cities.2,3
The importance of Asian cities is evident. They are (i) the focal points of economic activity and the engines for economic growth; (ii) the centres of excellence for education, healthcare, innovation, entrepreneurship, business, commerce, industry, culture and social services; (iii) large markets for all types of products, goods and services; (iv) well-connected with the wider world through all types of transportation, telecommunications and information technology systems; and (v) the primary centres for jobs, employment and livelihood opportunities.
There is strong evidence to suggest that urbanisation enhances productivity and countries with higher levels of urbanisation enjoy higher gross domestic product (GDP) per capita than countries with lower levels of urbanisation. For example, the ratio of city GDP per capita compared to national GDP per capita was found to be 1.9 for Metropolitan Manila, 2.5 for Calcutta, 3.5 for Bangkok, and 3.7 for Shanghai.4
In all countries, cities have a greater output per capita than other areas. This explains why income is higher in urban areas, the reason for the mass rural-urban migration, which in turn is good for economic development. Workers moving from low productivity rural areas to higher productivity urban areas increase the average productivity of the country and, consequently, its wealth. However, the ratio of city GDP per capita as compared to national GDP per capita could be even higher if cities could be made to function more efficiently. Higher productivity ratios for cities would bring substantial benefits to the national economies and make major inroads against poverty in both urban and rural areas.
Urbanisation enhances productivity and countries with higher levels of urbanisation enjoy higher gross domestic product per capita than countries with lower levels of urbanisation.
OPPORTUNITIES AND CHALLENGES
Rapid urbanisation has brought huge opportunities and benefits to Asians. However, city infrastructure has not been able to keep up with the tremendous economic and population growth in cities. This has brought significant resource constraints, difficulties in access to basic resources, inadequate housing and sanitation, negative impacts on human health, and environmental degradation. These issues have been neglected and under-funded for a long time. For example, Asia's cities must accommodate an additional 44 million people every year.5 However, the unmet urban infrastructural needs in Asia are estimated to be over $60 billion per year for water supply, sanitation, solid waste management, slum upgrading, urban roads and mass transit systems.6
Urban activities generate close to 80% of all carbon dioxide (CO2) as well as significant amounts of other greenhouse gases which contribute to climate change.7 Direct sources of greenhouse gas emissions include energy generation, vehicles, industry and the burning of fossil fuels and biomass in households. Let us take a look at one of these sources: vehicles. Even under the most optimistic current scenarios for managing the expansion of road traffic, CO2 emissions from the transport sector will triple in Asia over the next 25 years.8 The main reason for this increase is the increase in the number of vehicles currently evident and expected in Asian cities over the next two to three decades. Emissions from vehicles and transport equipment contribute not only to CO2 emissions, but also to local and regional pollution problems through the emission of carbon monoxide, lead, sulphur oxides and nitrogen oxides. Transport is not simply the largest source of greenhouse gas emissions, it is also the fastest growing source. With the vehicle fleet in Asia doubling every five to seven years, there is an urgent need to come up with cost-effective CO2 emission reduction measures for transport. The current trend is neither manageable nor sustainable.
If we look at other environmental issues such as water and wastewater, solid waste management, slum management and air pollution control, we will come to the similar conclusion that there needs to be a change in thinking, and in some cases, even a radical shift in the management of cities. Only then can Asian cities be sustainable and liveable. Hence the question: how can we turn Asian cities into environmentally sustainable cities?
SUSTAINABLE DEVELOPMENT
The future growth of Asian cities is largely dependent on the actions of policymakers and planners of these cities. The Asian Development Bank’s (ADB) approach to urban development focuses on improving quality of life, reducing urban poverty, maximising economic efficiency of urban areas, and achieving more sustainable forms of urban development.9 ADB’s 2006 report on Urbanisation and Sustainability in Asia highlighted some of the good practice approaches in urban region development. Research found that there were seven criteria for sustainability. These are good governance, improved urban management, effective and efficient infrastructure and service provision, financing and cost recovery, social and environmental sustainability, innovation and change, and leveraging international development assistance.
Here are some thoughts which the policymakers and planners may need to consider. First, the vision of the city government should be to promote safe, liveable, well-managed and environmentally friendly cities that are free of poverty. Solutions must be designed for sustainability and with the highest level of urban governance.
Second, funding needs of the cities for infrastructure should be adequately provided for. However, such development should consider an integrated approach combining energy, water and wastewater into a “neighbourhood” system with every possibility for reuse and recycling, and sustainability should be the overall goal.
Third, a societal commitment for a low-carbon lifestyle and low-carbon city that uses fewer inputs (water, energy and food) and produces fewer outputs (waste, heat, air and water pollution) needs to be made. Cities need to minimise the ecological impacts created by its inhabitants, while providing them with a healthy and comfortable environment, attending to their health, comfort, safety and life quality needs. Energy conservation measures, the substitution of renewable energy sources for fossil fuels, and new technologies such as hydrogen power, fuel cells and biofuels could also be considered.
Fourth, special attention should be given to the development and servicing of semi-urban areas and more attention needs to be given to rural/urban linkages, land management and resources allocation.
Fifth, efforts should be made to develop cities beyond work or commercial living and enjoyment, but to make them complete in all means so that those who live in cities feel that they are self-sufficient, empowered and safe and enjoy a clean environment.
The above actions are “doable”, if there is a will.
ABOUT THE AUTHOR
Bindu N. Lohani is Vice President (Finance and Administration) of the Asian Development Bank (ADB). Prior to this, Dr Lohani was Director General of the Regional and Sustainable Development Department; concurrently, he was ADB's Chief Compliance Officer and Special Advisor to the President on Clean Energy and Environment. Dr Lohani is an elected member of the National Academy of Engineering (NAE) of the United States-the highest professional distinction accorded to an engineer-for his work on an economic-cum-environmental approach to sustainable development. The views expressed in this article are those of the author and do not necessarily reflect the views and policies of the ADB, or its Board of Governors, or the governments they represent.
NOTES
Department of Economic and Social Affairs, Population Division, World Urbanization Prospects: the 2003 revision (New York: United Nations, 2004).
Department of Economic and Social Affairs, Population Division, World Population Prospects: The 2002 Revision (New York: United Nations, 2003).
Human Development Report 2005 (New York: United Nations Development Programme, 2005). For full report, see http://hdr.undp.org/en/reports/global/hdr2005/
Financing the City: ADB’s Perspective. The Urban Century in Asia. Paper presented by B.N. Lohani at the ADB Annual Meeting Seminar on “Financing the City”, May 2005.
Urbanization and Sustainability in Asia: Case Studies of Good Practice (Philippines: Asian Development Bank, 2006). See https://www.adb.org/sites/default/files/publication/27965/urbanization-sustainability.pdf
Special Evaluation Study on Urban Sector Strategy and Operations (Philippines, Asian Development Bank, 2006). For full report, see https://www.adb.org/
Report on the Dialogue on "Energy: Local Action, Global Impact" at the Third Session of the World Urban Forum, Vancouver, Canada, 22 June 2006, https://unhabitat.org/
Energy Efficiency and Climate Change Considerations for On-road Transport in Asia (Philippines: Asian Development Bank, 2006). For full report, see https://www.adb.org/
Asian Development Bank, Urban Sector Strategy, 1999. Taken from a seminar on "Sustainability and Asian Cities-ADB's Regional Vision and Singapore's Role", a conference organised by the Institute of Policy Studies in Singapore, 16 March 2007.