Building Prosperity: Housing and Economic Development

Citation

Abdel‐Baki, M. (2011), "Building Prosperity: Housing and Economic Development", International Journal of Social Economics, Vol. 38 No. 5, pp. 492-493. https://doi.org/10.1108/03068291111123174

Flip the pages of a daily newspaper in any developing nation and your eyes will instantly come across headlines of collapsing informal dwellings, disasters in shantytowns and scores of social calamities originating in slums. Whilst Western economies are overwhelmed with their endeavours to cushion the blow of the economic crisis that originated in their housing markets, developing nations are wrestling with their own version of home‐grown housing predicaments.

As much as the global community stands oblivious to the dilemmas of the poorer nations, who else is more capable of voicing the ordeal of the underprivileged and the agony of the deprived in the less developed world more than the former Under‐Secretary‐General of the UN and the Ex‐Director of the UN‐Habitat? Anna Kajumule Tibaijuka ventures on a lengthy voyage conducting a detailed autopsy of the inherent housing problems in developing nations that act as true barriers to human development. In her quest to help upgrade the lives of the one billion slum‐dwellers, the author shares with her readers a wealth of practical experience and conceptual expertise to help address extant institutional, cultural and financial barriers. Moreover, Tibaijuka's overflowing zest for treating housing as an essential human right and as a catalyst for sustaining economic development amidst rapid urbanization very much legitimizes her holding of the Göteborg Award for Sustainable Development.

The first three chapters of the book set the stage for effectively unraveling the root causes of housing shortages in developing nations. The true crux of the book is the fourth chapter that details the nexus between invigorating housing sector reforms and economic development. The author identifies how a vigorous construction boom has immense macroeconomic implications in regard to rapid GDP growth, enhanced savings, job creation and forward and backward linkages. More importantly, Tibaijuka commendably focuses on the social implications of better health, alleviated living standards and poverty reduction that are apt to be delivered by fulfilling the housing backlog and upgrading substandard dwellings. In true fact, it is quite apparent that it is very much the implications on human development that haunt the author as she repeatedly refers to the imperative role of housing in achieving the Millennium Development Goals and reducing the level of vulnerability of the poor. In this regard, the author accentuates that no poverty reduction strategy would be successful without the provision of decent housing for lower and middle‐income families.

When discussing the causes of the scarcity of mortgage finance, the author attempts to point fingers at a host of decadent economic paradigms, cultural norms and institutional frameworks. However, as much as the earlier analysis proved to be illuminating, the discussion of this specific topic appears to be disappointingly scanty. As very well elucidated by the author, it may be true that the high levels of employment in the informal sector stands as an obstinate barrier to providing necessary financial collateral. However, the chief intricate housing problems in less developed nations are blamed on the high interest rates that render mortgages unaffordable by the vast majority of the poor (Jordan, 2004). Another factor behind the fragility of this chapter is that it falls short of discussing the reason behind the lack of funds available to mortgage finance firms. With heavily regulated debt and equity markets and due to a relatively shallow financial sector, mortgage lenders are denied the right to mobilize funds through securitization (Gyamfi‐Yeboah and Ziobrowski, 2010). In this vein, governments and international development institutions urgently need to provide long‐term and fixed rate financing till deeper and more developed capital markets are born (Bestani and Klein, 2008). Another limitation of this chapter is the manner by which Tibaijuka addresses stabilization policies. She entirely overlooks the effective role that monetary policy can play in boosting housing starts (Iacoviello and Minetti, 2007) and instead limits her analysis to citing case studies demonstrating the methods of the utilization of tax incentives.

It must be mentioned at this point that it is conceivable that it is the author's enthusiasm to share her extensive and invaluable experience with a large audience of policy‐makers, students and economic development researchers that makes her book rich with case studies. Yet, in order to ensure an effortless reading experience it is advisable to cut down on the superfluous cases that exist throughput the book. In this regard, Tibaijuka could ensure that future editions of the book place the wealth of case studies in a separate appendix. This will undeniably furnish the book with the dual flavours of public policy efficacy and academic utility.

In her parting thoughts, the author produces an impressively focused and eloquently written final chapter in which she proposes a comprehensive set of policy reforms addressing every problem described in earlier chapters.

This is a vigilant and provocative book that very much serves the purpose of triggering serious deliberation on the critical issue of the nexus between housing and economic development. The time is ripe to embark on future research embedding housing policies as an integral component of sustainable economic and human development paradigms.