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TECHNICAL PROPOSAL

PAKISTAN URBAN SECTOR ASSESSMENT (#1094793)

Section A: Section B: Section C: Section D:

Consultants Organization Consultants Experience Comments/Suggestions on the Terms of Reference Description of Approach, Methodology and Work Plan Team Composition, Task Assignments & Level of Effort (LOE) CV of Proposed Key Personnel Work Schedule

Annex 1: Annex 2: Annex 3:

Selection No. 1094793 Technical Proposal Section A

A - Consultants Organization: RAND Corporation and Applied Economics Research Centre


RAND CORPORATION RAND was established in 1948 as a not-for-profit corporation dedicated to serving the public interest through research and education. For 60 years, decision-makers in the public and private sectors have turned to the RAND Corporation for objective analysis and effective solutions that address the challenges facing the nation and the world. These challenges include critical social and economic issues such as education and training, health care, labor and population, community development, science and technology, and criminal and civil justice, as well as a range of national security issues. RAND has about 1,800 employees; about 1,000 are researchers, of whom 87% have advanced degrees, most commonly a Ph.D. RAND research and analysis aim to provide practical guidance by making policy choices clear and addressing barriers to effective policy implementation; develop innovative solutions to complex problems by bringing together researchers in all relevant academic specialties; achieve complete objectivity by avoiding partisanship and disregarding vested interests; meet the highest technical standards by employing advanced empirical methods and rigorous peer review; and serve the public interest by widely disseminating research findings. RAND staff disciplines include economics, mathematics and statistics, medicine, law, business, physical sciences, engineering, sociology, psychology, anthropology and other social sciences, arts and letters, and computer science. RAND's reach is global, with regional offices in North America, Europe, and the Middle East. RAND has a broad base of employees, adjunct staff and other consultants, which allows for effective project staffing and changes as needed. We can draw on the expertise of the entire RAND staff, bringing additional capabilities to a research team when needed. With access to this exceptional pool of talent, we can meet the unique requirements of each study and deliver the results our clients expect. In the area of international development, RAND has a growing and diverse portfolio of policyrelevant research for international organizations and governments. For example, RAND researchers have recently or are currently conducting a number of major projects for the World Bank, including studies of urbanization and poverty in Indonesia, school reform in Indonesia, tariff and nontariff barriers to regional trade in South Asia, climate change and migration in the Middle East, and health care quality in Tajikistan. RAND has extensive ongoing relationships with government clients in Qatar, the Guangzhou region of China, and the Kurdistan region of Iraq, where we have carried out research on private sector development, health, education, and labor markets. Other current or recent projects in international development include analysis of the impacts of ART provision on HIV positive individuals in Uganda, research on health risk behaviors of Palestinian youth, am impact evaluation of cataract surgery in Ethiopia, and a randomized controlled trial of sales contracts using mobile banking to increase the use of safe water filters in Kenya. This work has employed teams of

Selection No. _________ Technical Proposal Section A

researchers with complementary backgrounds in economics, health policy, education, engineering, statistics, and other disciplines as required by the design of the specific projects. RAND is also a leader in population research in developing countries, much of which derives from the development and analysis by RAND researchers of innovative large-scale surveys, including the Family Life Surveys (such as the ongoing Indonesian Family Life Survey), the China Health and Retirement Longitudinal Study, the Korean Longitudinal Survey of Aging and the Longitudinal Aging Study in India. To support its portfolio of work in international development, RANDs Labor and Population Unit formed the Center for Research and Policy in International Development (RAPID) in 2009. Peter Glick, a proposed co-PI on this proposal, is the Director of RAPID. RAND also carries out innovative work in the areas of land use and urban and transportation planning. A landmark RAND study considered a broad array of political, economic, social, resource, and environmental challenges that a new Palestinian state would face, and developed a detailed vision for a modern, high-speed transportation infrastructure, referred to as the Arc. RAND is currently preparing a plan for the development of a Knowledge City in the Guangzhou region in southern China which will foster a regional center of innovation, technological development and commercialization connected to the global economy. With funding from the Institute for Mobility Research, RAND has conducted several research projects to examine the different paths of mobility development (e.g., car ownership and car use) in industrialized and emerging countries. RANDs study for the World Bank on urban poverty in Indonesia (co-led by Peter Glick) considered access to municipal services, housing, and infrastructure of low income urban residents; a separate component of that study evaluated a major community driven development program that focused on local urban infrastructure development. APPLIED ECONOMICS RESEARCH CENTRE RAND will partner on this study with The Applied Economics Research Centre (AERC). Marking its 40th year in 2013, AERC, a constituent part of the University of Karachi, undertakes research on issues in applied economics, with special interest in education and human resource development, trade, urban and regional economics, agriculture, industrial economics, poverty, health and nutrition, public finance, environment and gender issues. With subsequent growth of the Centre, its activities have broadened to include advance training of economists from all parts of Paki stan. A major development in this connection has been the introduction of its M.Phil./Ph.D. programme which started in 1977.

Selection No. _________ Technical Proposal Section A

The Centres director is Prof. Dr. Nuzhat Ahmad, Ph.D., a leading economist in the fields of Urban, Institutional Economics, Poverty, Public Finance, and a co-PI on the current proposal. The Centres research work is disseminated to policy makers and interested audience through its publications, including its Research Report Series, a Discussion Paper Series, and an internationally refereed bi-annual journal, The Pakistan Journal of Applied Economics. Research activities at the AERC include contract research for clients and core or staff research; all of the Centres research is highly policy oriented. Clients for contract research include international agencies such as the World Bank, the Asian Development Bank, USAID, UN Agencies, DFID, Harvard Institute for International Development, Free University of Amsterdam, and the International Food Policy Research Institute. The AERC has also undertaken many research assignments for Pakistan Government agencies and task forces, including the Pakistan Agriculture Research Council, Planning Commission, National Taxation Reforms Commission, Government of Sindh, Sindh Regional Plan Organization, Agriculture Development Council, Karachi Metropolitan Corporation, Karachi Development Authority, City District Government, the Aga Khan University and the Export Promotion Bureau. The AERC has extensive research experience in the key topic areas covered under the current proposal, including urban economics, urban planning, and finance. The staff members on this proposal have led or participated on a number of assignments in these areas, examples of which are detailed below in Section B.

Selection No. _________ Technical Proposal Section B

B - Consultants Experience
RAND CORPORATION:
Assignment name: Indonesia Urban Poverty, Program Review and PNPM-Urban Process Evaluation Country: Indonesia Location within country: Name of Client: World Bank Contact Person, Title/Designation, Tel. No./Address: Peter Glick, Senior Economist, RAPID, Director 703-413-1100 RAND Corporation 1200 S Hayes St, Arlington, VA 22202 Start date (month/year): 1/2011 Completion date (month/year): 1/2012 Name of associated Consultants, if any: Survey Meter Approx. value of the contract (in current US$): $450,000 Duration of assignment (months): 12 months Total No. of staff-months of the assignment: 11.5 staff months (231 staff days)

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Peter Glick, Principal Investigator Joanne Yoong, Principal Investigator

Description of Project: This study had the following main objectives: (a) understanding the characteristics of urban poverty in Indonesia and any emerging trends through household survey data analysis; (b) reviewing urban poverty programs and services to assess the extent to which they address the needs of the urban poor, and how effective they are; (c) carrying out an in-depth process evaluation the PNPM-Urban anti-poverty program, which uses block grants to communities primarily to fund local infrastructure development. Description of actual services provided by your staff within the assignment: For objectives (a) and (b), RAND analysed trends and patterns in urban poverty in Indonesia since 2000 using household data and other sources; assessed the targeting effectiveness of public services and antipoverty programs in urban areas; and reviewed and synthesized the extensive literature on urban poverty in Indonesia. For objective (c), RAND conducted a process evaluation of the PNPM-Urban anti-poverty program in Indonesia. The project included site visits to 15 randomly selected sites throughout the country. In each site a RAND teamworking with research partner Survey Meter conducted structured interviews, infrastructure assessments, and focus groups with the goal to assess the implementation of the PNPM-Urban program and its efforts to construct small-scale infrastructure projects through a community-driven development (CDD) approach. The infrastructure projects assessed include water, sanitation, housing, and transportation initiatives. RAND worked closely with the World Bank to disseminate results and ensure conclusions could be used to inform future Bank lending activities in Indonesia. Assignment name: Developing a Strategy to Increase Private Sector Employment in the Kurdistan Region Country: Iraq Location within country: Kurdistan Region of Iraq Name of Client: Kurdistan Regional Government Approx. value of the contract (in current US$): $1,024,000 Duration of assignment (months): 13 months Total No. of staff-months of the assignment: 19.7 staff-months

Selection No. _________ Technical Proposal Section A Contact Person, Title/Designation, Tel. No./Address: Howard J. Shatz Senior Economist (703) 413-1100 X 5184 RAND Corporation 1200 South Hayes St., Arlington, VA 22202 Start date (month/year): 2/2010 Completion date (month/year): 3/2011 Name of associated Consultants, if any:

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: 19.7 staff months Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Louay Constant, Principal Investigator Howard J. Shatz, Principal Investigator Peter Glick, Co-Investigator Jill Luoto, Co-Investigator Alexandria Smith ,Co-Investigator

Description of Project: The objective of this project was to provide the Kurdistan Regional Government (KRG) with a strategy to reemploy civil service workers in the private sector and increase private sector employment in the Kurdistan Region. Description of actual services provided by your staff within the assignment: RAND conducted four tasks. Task 1: We assessed the climate for business formation and foreign business expansion in the Kurdistan Region by reviewing relevant laws, regulations, and reports, and by interviewing government officials, local business people, and foreign investors. Task 2: We identify and evaluate opportunities for privatization of government functions by reviewing the various roles and functions performed by the government and the extent to which those roles could be carried out by the private sector. As part of this task, we also reviewed the growth strategies of other countries. Task 3: Using microdata from a household survey conducted by the local and national statistical authorities and a multilateral organization, we analysed the skills and education of civil service employees and compared them to private sector employees to learn whether civil servants who were shed from the government had appropriate skills for private-sector work. Task 4: We then evaluated the civil service compensation system and personnel policies in comparison to those of the private sector to see how incentives for working in the civil service could be changed. Finally, we provided the KRG with a strategy and suggested policy measures for decreasing the size of the civil service and increasing private sector employment.

Assignment name: Political Economy Study on South Asia Regional Trade and Cooperation Country: Indonesia Location within country: Name of Client: World Bank Contact Person, Title/Designation, Tel. No./Address: Dr. Rafiq Dossani RAND 1776 Main Street

Approx. value of the contract (in current US$): $150,000 Duration of assignment (months): 12 months Total No. of staff-months of the assignment: 4 staff months

Selection No. _________ Technical Proposal Section A Santa Monica, California 90401-3208 Tel: (310) 393-0411 x7275 Start date (month/year): 1/2013 Completion date (month/year): 5/2013 Name of associated Consultants, if any: No. of professional staff-months provided by your consulting firm/organization or your sub consultants: 4 staff months Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Rafiq Dossani, Principal Investigator Olesya Tkacheva, Co-Investigator Description of Project: Study of the political economy of tariff and nontariff barriers to trade in South Asia in power, telecom, business services, transport, and textiles The project will identify critical tariff and especially non-tariff factors that have so far impeded regional integration and developing policy recommendations on how to promote regional integration in South Asia. It will do so by studying: The negotiating challenges that arise from differences in economic strength, population size, political stability, and administrative capacity across nations. The domestic challenges each country faces arising from internal stakeholders, such as the influence of organized businesses and labor, provincial governments and bureaucracy. The non-tariff barriers particularly in procedures and rules for cross-border trade. Approaches to resolve the challenges

Assignment name: Creating a Globally Connected Regional Innovation System for the Guangzhou Development District Country: China Location within country: Guangzhou Name of Client: Guangzhou Development District Contact Person, Title/Designation, Tel. No./Address: Keith Crane, Director, Environment, Energy, and Economic Development Program 703-413-1100 x5520 RAND Corporation 1200 S Hayes St, Arlington, VA 22202 Start date (month/year): 3/2011 Completion date (month/year): 9/2012 Name of associated Consultants, if any:

Approx. value of the contract (in current US$): $606,000 Duration of assignment (months): 15 months Total No. of staff-months of the assignment: 13.8 staff months (277 staff days)

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Keith Crane, Principal Investigator Howard Shatz, Principal Investigator

Description of Project: This study had the following main objectives: (a) To assist the Guangzhou Economic and Technological

Selection No. _________ Technical Proposal Section A Development District (GDD) in developing a vision and outlining a strategy for attracting world-class scientific, engineering, and entrepreneurial talent to and fostering high technology companies in Knowledge City so as to make GDD a leading international center of innovation. Description of actual services provided by your staff within the assignment: RAND provided a detailed assessment of the current business, regulatory, and legal environment for high technology star-ups in the Guangzhou Development District. We conducted a survey of 300 high technology start-ups from a population of over 1,000; interviewed over three dozen entrepreneurs, government policymakers, and financiers, and provided three case studies of successful high technology clusters: the Maryland biotechnology cluster, the Israeli information technology corridor between Haifa and Tel Aviv, and Silicon Valley. The case studies involved interviews with entrepreneurs, local government officials, including those engaged in economic development, and venture capitalists. We also reviewed and drew on the extensive literature on innovation and cluster formation. RAND worked closely with the Guangzhou Development District to provide policy recommendations consistent with national and local regulations and customs and that could be implemented by the client. The project produced two published reports in English and Chinese, An Outline of Strategies for Building an Innovation System for Knowledge City http://www.rand.org/pubs/monographs/MG1240.html and Creating an Innovation System for Knowledge City http://www.rand.org/pubs/technical_reports/TR1293.html. Assignment name: Climate Change and Human Migration in the Middle East and North Africa Country: Middle East and North Africa Location within country: Name of Client: World Bank Contact Person, Title/Designation, Tel. No./Address: Nicholas Burger, Associate Economist 703-413-1100 RAND Corporation 1200 S Hayes St, Arlington, VA 22202 Start date (month/year): 5/2010 Completion date (month/year): 6/2012 Name of associated Consultants, if any: Ipsos MENA Offshore, SAL Dekwaneh, PO Box 55103 Beirut - Lebanon Approx. value of the contract (in current US$): $200,000 Duration of assignment (months): 25 Months Total No. of staff-months of the assignment: 1.5 staff months (30 staff days)

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Nicholas Burger, Principal Investigator Audra Grant, Principal Investigator

TNS Maroc SARL 219, Angle Bd, Zerktouni & Bd Roudani Casablanca Maroc Description of Project: This project considered a) what the role is of slow- and rapid-onset climatic events in migration decisionmaking; b) what the role is of migration in climate adaptation. Description of actual services provided by your staff within the assignment: RAND conducted a study on the impact of climate change and environmental degradation on migration patterns in the Middle East and North Africa. The study is being implemented in Morocco, Algeria, Egypt, Syria, and Yemen. The research explores adaptation strategies to climate stresses including excessive rainfall, drought, flooding, growing season shiftsamong households and communities, with a specific focus in internal migration as an adaptation strategy. The data gathering components include focus groups, surveys, and expert interviews. The study will culminate in analysis and recommendations for governments and stakeholders about household views on changing weather patterns, the impacts of weather on household welfare and decision making, and household responses to climate change-related events.

Selection No. _________ Technical Proposal Section A

APPLIED ECONOMICS RESEARCH CENTRE (AERC):


Assignment name: A Profile of the City of Karachi: Master Plan 2000 Country: Pakistan Location within country: Karachi Name of Client: World Bank/Karachi Development Authority Contact Person, Title/Designation, Tel. No./Address: Approx. value of the contract (in current US$): 1,439,625 (Pakistan Rupees) Duration of assignment (months): 26 Total No. of staff-months of the assignment: 18 man-months per person: 26 months

Start date (month/year): March 1987 Completion date (month/year): April 1989 Name of associated Consultants, if any:

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Dr. Nuzhat Ahmad Dr. Kaisar Bengali Mr. Riaz Hussain

Description of Project: Description of actual services provided by your staff within the assignment: A project provided technical assistance to the Master Plan and Environmental Control Department to prepare the Master Plan for the Karachi Metropolitan Region for the period 1986 to 2000. A survey of over 7500 households was undertaken which was spatially distributed throughout the city of Karachi and included Katchi Abadis. Data was analysed to develop the profile of households, their patterns of demand for services and infrastructure. Advise was provided to the Karachi Development Authority on various aspects of preparation of the Master Plan 2000.

Assignment name: Housing Situation in Urban Centres of Sindh Country: Pakistan Location within country: 13 cities of Sindh Province Name of Client: Sindh Regional Plan Organization Contact Person, Title/Designation, Tel. No./Address: Start date (month/year): July, 1990 Completion date (month/year): December 1990 Name of associated Consultants, if any:

Approx. value of the contract (in current US$): 275,000 Pakistan Rupees Duration of assignment (months): 6 months Total No. of staff-months of the assignment: 5 6 months per person

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Dr. Hafiz A. Pasha

Selection No. _________ Technical Proposal Section A Mr. M. Sabihuddin Butt Description of Project: Description of actual services provided by your staff within the assignment: Preparation of socioeconomic demographic and housing profiles for secondary cities of Sindh (excluding Karachi). Housing profiles were based on key housing characteristics of units and on data based on primary survey of households. Assignment name: Prospects of Pakistan Urbanization Country: Pakistan Location within country: Name of Client: WWF Adjustment and Environment Project Contact Person, Title/Designation, Tel. No./Address: University of Karachi Start date (month/year): January, 1994 Completion date (month/year): June, 1994 Name of associated Consultants, if any: Approx. value of the contract (in current US$): -Duration of assignment (months): 6 Total No. of staff-months of the assignment: 1 3 person months

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Muhammad Sabihuddin Butt

Description of Project: Study describes the situational analysis of urbanization provide in-depth analysis pertaining to the urban dynamics in terms of city characteristics, growth, tempo of urbanization and primate city analysis. Description of actual services provided by your staff within the assignment: --

Assignment name: Reports on Hyderabad District Master Plan, 2010 Country: Pakistan Location within country: Hyderabad Name of Client: City District Government of Hyderabad Contact Person, Title/Designation, Tel. No./Address: Start date (month/year): October, 2005 Completion date (month/year): March, 2006 Name of associated Consultants, if any:

Approx. value of the contract (in current US$): 0.63 Million Pakistan Ruppees Duration of assignment (months): 16 months Total No. of staff-months of the assignment: 4 16 person months

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Muhammad Sabihuddin Butt Mr. Noman Saeed Mr. Tehseen Iqbal Mahrukh Shahnaz

Description of Project:

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Selection No. _________ Technical Proposal Section A The study, as part of Hyderabad City water plan, estimated population (rural and urban) projection for the next three decades at City level, Taluka level and Union Council level through employing cohort component method. Demand analysis for infrastructure development for the formulation of district level investment strategies for the provision of urban services and the affordable level, including land management. Description of actual services provided by your staff within the assignment: --

Assignment name: Approx. value of the contract (in current US$): Intergovernmental Fiscal Transfers for Equitable 1,212,600 Pakistan Rupees In-Country Growth Country: Pakistan Duration of assignment (months): Location within country: 23 months Name of Client: Total No. of staff-months of the assignment: ADB 3 3 months per person Contact Person, Title/Designation, Tel. No./Address: ADB, Manila Start date (month/year): January, 2001 Completion date (month/year): December 2002 Name of associated Consultants, if any:

No. of professional staff-months provided by your consulting firm/organization or your sub consultants: Name of senior professional staff of your consulting firm/organization involved and designation and/or functions performed (e.g. Project Director/Coordinator, Team Leader): Prof. Dr. Nuzhat Ahmad Syed Ashraf Wasti

Description of Project: Cross country comparative research to assess intergovernmental fiscal transfers Description of actual services provided by your staff within the assignment: The study examined the rationale problems and issues in fiscal equalization arrangements in Pakistan. The study explored the possibilities of developing an improved formula for transfers from the federal to the provincial governments and then to the local governments. It looked at the formula in terms of whether the transfers should be directly routed from the Federal to the local governments.

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Selection No. _________ Technical Proposal Annex 1

C Comments and/or Suggestions on the Terms of Reference


[Present and justify here any modifications to the Terms of Reference your consulting firm/organization would like to propose, if there are any, to perform the assignment better and more effectively (e.g. deleting some activity that you find unnecessary, adding others or proposing a different phasing of the activities). Such suggestions should be concise and incorporated in your Proposal.]
Overall data availability risk: In addition to the specific data limitations noted above, we note the general issue of data-related risk for this project. Specifically, although the RAND-AERC team has extensive experience with the relevant data sources and analysis methodologies for this assignment, we expect that we will encounter data-related limitations associated with data availability or data quality. These are noted in the description of methodology in Part D. We request the opportunity to revisit the requirements of the TOR collaboratively with the World Bank team should data limitations arise that may preclude parts of the proposed analysis. We expect to have clarity on many of the data issues by the time of the inception report.

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Selection No. _________ Technical Proposal Annex 1

D - Description of Approach, Methodology and Work Plan


a) Technical Approach and Methodology
In the following we describe, for each of the tasks set out in the TOR, our understanding of the questions to be addressed, our proposed methodologies for doing so, and data that we expect to use. We note here, that per our conversation on the revised TOR, Part I on the system of cities will to the extent possible draw examples from across the urban hierarchy (e.g. large, medium, small cities). Part II, which has more of a policy focus, will emphasize conditions and policies in large cities, in particular, Lahore, Islamabad, Hyderabad, Faisalabad, Peshawar, and Karachi. The methodology for the analysis in Part II will include use of secondary literature and data as well as original data collection (e.g., interviews, gathering of municipal government data). The precise methodology applied for each of these cities (in particular, where primary data will be collected) will be spelled out in the inception report. PART I. Urbanization characteristics and dynamics Part I, Task 1: System of Cities The goal of this task is to describe the current levels and growth rates of urbanization at the national and provincial levels. In addition, this task involves estimating and describing changes over time in the population of cities, and undertaking projections that will identify cities which will have populations of over 1 million by 2030. Additional analysis in this task will focus on the economic role that cities play in this system of cities. , including estimating city or metropolitan region economic size and dominance, and the economic connectivity of cities in the system. a. With respect to urbanization, we will approach the analysis in several broad steps. First, we will conduct a comprehensive analysis of national, provincial, and city level urbanization using the last two Pakistan censuses (1981 and 1998). Although not contemporary, the data from these censuses provides the most thorough and accurate information for addressing the goals of this task, will clearly describe what has happened in the relatively recent past, and will provide a baseline for additional analyses. Second, estimates of current urbanization levels and growth at the national level and for select cities (the ten largest in 2010) will be derived from the United Nations World Urbanization Prospects data. Third, relying on the World Urbanization Prospects data and supplemental analyses we will make population projections to 2030 in order to identify cities with expected populations over one million. The analysis will also attempt to estimate current population and growth of other (smaller) cities, and to identify new large cities that are emerging since the 1998 census and where (e.g., in which provinces) they are emerging.

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Selection No. _________ Technical Proposal Annex 1

Data sets to be utilized for this task include, in addition to the census data, the United Nations World Urbanization Prospects (2011 Revision) and World Population Prospects (2010 Revision). 1 We will also investigate a range of other sources, including U.S. Census Bureau data (which has estimates to the tehsil or district subdivision level) and province level statistical publications. To facilitate city and area specific analyses, we will first identify a class system of cities based on size, consistent with the approach in other Urbanization Reviews. We will then summarize the total population and urban population represented by each class nationally using census data. Further, we will identify changes in classifications by cities over the last two censuses. We will describe the ranksize distributions of cities nationally and within each province. We will identify average city size in 1998, and the annual growth between 1981 and 1998 by province and by city class. We will also summarize city population statistics (e.g., population density, annualized growth rates) in 1998 and changes between 1981 and 1998 by province and by city class. For the second step in the analysis, we will report estimates of the total population and urban population currently represented by each class nationally. We will identify changes in classifications by the ten largest cities from 1998, as well as their current size and growth rates, and attempt this as well for smaller cities. For the third step, we will extend existing population projections to 2030 in order to identify cities with expected populations over one million. These analyses will provide information on which cities are growing, declining, or remaining stable over time. Insights into reasons for growth or decline of cities will be provided based on a range of other data, including economic growth and sector-specific growth in different cities and regions. b. To address the topics of economic roles of cities, we will analyze available data and literature to determine the relative importance of each city/metropolitan area to the Pakistani economy. The starting point for this analysis will be an estimate of the size of each urban area in terms of economic production. We will obtain each citys contribution to gross domestic product using, if available, reports from the Federal Bureau of Statistics, allowing us to measure the relative economic importance of each city (or types of cities if information per city cannot be obtained). The economic output of each urban area arises from a combination of size, in terms of population and other inputs, and the productivity of labor and other inputs. Population size estimation is discussed in Part (a) above. Here, we will analyze productivity as measured by output per capita, as well as labor productivity (output per worker), using data from the national accounts. We will examine how total output and output per capita varies across different urban areas, and to the extent possible we will group cities by province, size classification (large, medium, and small), and by distance to other major urban centers (Karachi, Lahore). To put our findings in perspective, as well as to assess the potential

The UN has more detailed information but this is largely limited to city class (size) and not specific cities within classes. This would permit projections based on class of city, but cities within the same class will have the same growth rate assumptions.

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Selection No. _________ Technical Proposal Annex 1

for growth and attractiveness for investment, we will compare productivity measures with benchmarks in the South Asia region and elsewhere, available through secondary sources. To further understand the drivers of differences in economic production and productivity, we will use the Labor Force Survey data, gross domestic product data and the census of manufacturing industries to analyze each citys employment structure. This will examine the fractions of total employment in each city that correspond to each of the major industrial and occupation categories. Differences in these employment shares will be analyzed by province, size classification, and distance from major urban centers. We will also use existing data sources to examine the concentration of Pakistans major industries and how this has evolved over time. Concentration will be measured using industrial concentration indices such as the Hirschmann-Herfindahl Index of employment concentration or the Ellison and Glaeser (1997) concentration index. One source of data we may use for this is plant-level census data with information on each plants employment sizes and location of operation, obtained from Pakistans Census of Manufacturing Industries. Alternatively, modified industrial concentration indices can be constructed using disaggregated data collected for the Labor Force Survey. Using rounds from different years, indices based on either source can also be used to measure changes in concentration over time. We will compare our estimates of spatial concentration for specific industries in Pakistan to those calculated for similar industries in other countries. This will allow us to assess the extent to which certain industries in Pakistan appear to be under-concentrated, suggesting potential gains from incentivizing firms to move closer together, given the expected potential agglomeration externalities discussed under Part I, Task 1. Such an analysis may also indicate where particular shortfalls in Pakistans provincial and regional business climates lie. Next the analysis will measure diversity or the mix of industries in cities and how this is changing. A location quotient approach will be used, measuring by industry each locations share of that industrys employment relative to its share of national employment. A higher location quotient implies relatively higher concentration or specialization of that industry in a particular location. Quotients will be calculated at sectoral, provincial, city size and city levels, and these will be informative about the industrial and economic structure of cities. Even where two cities contain the same industries, those industries may differ dramatically in terms of their levels of sophistication, capital intensity, use of skilled labor, and productivity. Examining this dimension will provide a way to assess Pakistans overall economic growth prospects, while comparisons for different cities will indicate where this growth is likely to take place. To do this, we will use available published figures from manufacturing census to distinguish between different types of firms, distinguishing by their use of skilled labor, capital-to-labor ratios, and overall productivity. As above, we will study this by province, size classification, and location to the extent possible given the data. Although definitions vary, the informal sector is estimated to account for over half of employment in the urban economy in Pakistan. To analyze the importance of informal employment in different cities, as well as variation in industry and skill composition, we will rely primarily on the Pakistan Labor

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Selection No. _________ Technical Proposal Annex 1

Force Survey. The LFS contains standard variables that can be used to define whether a job is formal or informal. If published reports are not adequate, we will explore a direct analysis of the most recent LFS data to estimate the prevalence of informality in each city-metropolitan area for which the data is representative as well as analyze its prevalence by region and type of city. We will also estimate correlations between the prevalence of informality in different cities and the industrial composition of those cities, described in previous paragraphs. We note that the feasibility of direct analysis of the data will depend on data availability and quality. The above analysis will allow us to describe primarily cross-sectional variation in the location of economic activity, where the fastest growing industries are locating, and which types of cities are attracting different types of businesses. We will complement this cross-sectional analysis with an analysis of recent trends and changes. This will be done using published figures from the Census of Manufacturing Industries of 2000-2001 and 2005-2006, looking for changes over time and determining what types of economic activities have grown and where.

As implied above, an important determinant of economic growth in Pakistans cities both overall and in specific urban centers is the business climate or incentives for investment. While generally favorable relative to regional peers, the investment climate in Pakistan has weakened substantially in the last decade due to political uncertainty, and has hindered the ability of Pakistan to take advantage of the Multi Fibre Arrangement to the extent others in the region, notably Bangladesh, have. We will review available literature and published statistics on investment climate in urban areas and if available, specific cities. A key source will be the Doing Business in Pakistan reports, in particular the 2010 report as well as the Doing Business in South Asia Report from 2005-7. These particular reports are valuable for our purpose because they collected information from small and medium sized firms at the subnational level (6 major cities in the earlier report and additional 7 in the later one, permitting analysis of changes in the former). For Karachi, more recent information is available in the most recent (2103) report. We will also use the 2007 World Bank Enterprise Survey report, which also collected information on obstacles facing small, medium, and large firms, including information on corruption, infrastructure, and other factors. This survey is representative only at the province and industry level, which limits is applicability to cross-city analysis. Finally it is also of interest to analyze the level of urban poverty by region and by city type, and observe how it correlates with the analysis of economic dominance presented above, and the relationship between city size (population) and poverty rate. To examine these patterns we will rely primarily on published data on poverty by province and rural/urban and specific cities, if available, based on existing analysis of PSLM data. Given the complexities of original calculations of poverty using household survey data (creating or verifying a household consumption aggregate; defining appropriate spatial and temporal price deflators; defining the poverty line) such an analysis is beyond the scope of this report. However, if the existing data PSLM set already contains poverty indicators for households, we can analyze these data for the analysis of these patterns2. An extension of the analysis would be to distinguish where urban poverty rates are highest and where the absolute
2

We will ask the World Banks assistance in ascertaining whether the data in this worked up form exist and accessing the data.

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Selection No. _________ Technical Proposal Annex 1

numbers living in poverty are highest, as the two may diverge significantly with implications for policies to target the urban poor.

c. To analyze connectivity: Economic connectivity in the system of cities: Connectivity in this sense relates to spatial allocative efficiency and inter-city economic connectivity in the system of cities approach. The analysis described above on economic roles and industrial structure of different cities will be an input into an analysis of specialization and economic connections among cities within Pakistan. We will draw conclusions from the data analysis as well as a range of published reports on how specific cities are linked economically (for example, upstream and downstream industries) and how these roles differ by city, province, and by city class. As is stressed in the systems of cities literature (e.g. Abdel-Rahman and Anas, 2004), we will discuss how larger cities in Pakistan, such as Karachi and Lahore, are characterized by a diversity of economic activities, while smaller cities tend to specialize, and we will examine the extent to which this distribution is optimal. Policies that could be enacted to encourage a more efficient or growth-enhancing distribution of industries and economic activities across the city system will be explored.

One factor that could limit city specialization within the system would be transport barriers. High transport costs between cities make it difficult for both downstream input producers to reach upstream firms, and for final goods producers to reach consumers or export markets. For this sub-task, we will provide an overall assessment of the quality and effectiveness of transport infrastructure and transportation options, both within and between cities in Pakistan, and identify where key constraints in connectivity must be addressed to improve access to internal and international markets and suppliers. In particular, we will consider issues such as whether cities are concentrated along key national transport corridors; whether there exists connective infrastructure between cities where clusters are emerging, whether corridors or systems of cities are emerging in the production and transit of goods. Relying on the secondary literature, we will attempt to assess specific constraints on connectivity that arise from, e.g., the organization of the transportation logistics and haulage industry, as well as from the quality and quantity of infrastructure. Data sources for the foregoing analysis will include reports from Pakistans National Highway Authority (NHA), published reports on average annual daily traffic (AADT) counts, reports from the Ministries of Railways, Ports and Shipping, and the Civil Aviation Authority (CAA). Where possible, we will attempt to identify which industries use which types of modes more or less intensively. Finally, we will combine available information on the reliability, effectiveness, and cost estimates of different modes of transport with our assessment of the fastest growing urban areas in Pakistan. This will allow us to understand where transportation problems are placing constraints on the effectiveness of urban corridors and where economic growth is most promising.

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Connectivity within cities: High costs of connectivity within cities increase commuting times, reduce productivity growth, and limit the ability for firms to take advantage of agglomeration economies. The costs may be high because of transportation issues, supply-chains reliant on informal firms, a low level of intermediary services, weak land markets, bandwidth shortages, contract enforcement and other factors. We will focus on Karachi as a crucial case study, but draw on other cities where data are available. Karachi is selected because it is Pakistans largest city with 21 million people and contributes over a third of the countrys GDP; it is one of the worlds most populated urban agglomerations; and it has experienced tremendous growth in recent decades, which has placed great strain on connectivity. For the transportation sector, we will use JICAs study on Karachis Transportation Improvement Plan (KTIP). This information should provide an overview of the urban transportation problems faced by Karachis residents and help us to assess the strengths and weaknesses of Karachis urban transportation system. We will also synthesize and interpret evidence from these and other studies for Karachi, including various surveys on doing business in Pakistan, to understand the full range of connectivity issues. Of particular interest is whether certain income groups or neighborhoods are priced out of, or are otherwise unable to avail themselves of, the citys opportunities. This may arise because of the unavailability of specific transport options or simply because of distance to the city center. Part I, Task 2: Drivers of Urbanization The goal of this task is to identify current centers of major net in-migration, and to predict which urban centers will experience large growth due to migration in the future. Additionally, major trends in the type of migration occurring (rural to urban, urban to urban) will be identified, along with an examination of the factors driving migration and urbanization. Finally, to the extent possible given available data, regional variation in migration, and the links between urbanization and rural/urban poverty, will be examined. We will utilize published analyses of migration and carry out new analysis of existing data sources, such as the 1998 Census and LFS 2001-2011, to accomplish this task. First, we will construct origindestination matrices from the 1998 Census to describe trends in migration at the national, provincial, and city levels (including the city classes defined in Task 1 as well as specific selected cities of interest). These matrices will identify major centers of in-migration and rural/urban migration flows for the recent past. The census and the LFS both provide information on migrants from other countries, which we will supplement with national registry data. In order to provide more current information on migration patterns, we will replicate the census origin-destination matrices analyses with the LFS. The LFS surveys ask place of previous residence for urban and rural respondents, as well as information on reasons for migration, and this data will facilitate identification of push/pull factors in the migration process by urban/rural origin. While respondents answers to questions about reasons for moving (e.g., economic, family, social services access, unrest) are important, such answers may not capture broader factors. Therefore we will also consider (to the extent possible given available time and data) other factors, such as trends in investment and output in different industries, agricultural production, improvements to transport infrastructure, and provision of services. These analyses will illuminate the drivers of rural to urban migration (urbanization), and how they vary across the country and by different characteristics of different cities (or city classes).

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Also with respect to potential drivers, we will examine links between urbanization and rural/urban poverty, using information on household consumption and poverty for urban and rural areas from two waves of PSLSM surveys, 2004-5 and 2010-11.3 Appropriate recognition will be given to the possibility that poverty levels within both rural and urban areas may be caused by migration between the two as well as being a cause of migration. In conjunction with the analyses of Task 1, we will investigate the extent to which population is concentrating over time in specific locations. Finally, we will identify areas of significant future in-migration through extrapolation of trends from the LFS data over the last ten years. To keep the task manageable given resources, we will compare two surveys to capture trends, such as 2001-2 and 2010-11. Our understanding of the various data sources suggests that detailed data on migration will be sparse, and data availability will dictate the level of precision we can achieve. Migration data from the census is expected to provide good estimates of the levels and flows of migration in the recent past, but by itself, it will provide little information on the drivers of migration. Migration data from the LFS will provide more current and more detailed information about the migration process, but at the expense of geographic coverage. Part II, Policies to manage congestion costs, enable growth, and promote livability Task 1: Municipal governance and service delivery The goal of this task is to (1) understand the effect of municipal management and governance on public service delivery, at the country-wide level and for selected provinces and cities and (2) provide a picture of the state of service delivery in urban areas. As noted earlier, for this and the other tasks in Part II the emphasis will be on, and examples drawn from, Pakistans larger cities. In particular, RAND and AERC plan to focus on Karachi and two other major centers, to make possible concentrated interviews and collecting of data from city government agencies. With respect to (1) the team will investigate variations in management and governance across cities and identify ways to manage urban growth when management capacity is limited, governance challenges render well-designed policies ineffective, or financing (via the tax base) is insufficient. Pakistan has a history of under-investing in service delivery, which has led to a major gap in both the provision and coverage of basic services. The first step in this task will be to review municipal management and governance mechanisms related to public service delivery at the national, provincial, and city levels. We will focus on six key cities, which for now we assume will be Lahore, Islamabad, Hyderabad, Faisalabad, Peshawar, and Karachi (this list can be changed and will be finalized for the Inception Report). Relying on the secondary literature or data collected by the team from local government agencies, we will assess trends in the structure and composition of revenue and
3

We expect to derive this information from summary data in published (or unpublished but accessible) reports on these surveys. If these do not contain the information necessary for the analysis, we will explore working directly with the LSM data to generate the necessary statistics. However, the feasibility if this will depend on the compatibility of the surveys for this analysis over time, including consistency in variable and location definitions and other factors .

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expenditure and provide insights on whether and how metropolitan performance varies across provinces and cities. Our examination of urban governance will include a review of the various Ordinances and Amendments to the Constitution which govern urban management functions and will assess how these laws may drive future service delivery efficiency. The analysis will consider the implications of Local Government System of 1979, which gave government control to the provinces but provided no financial powers to the local governments; the Local Government Ordinance of 2001, which lacked clarity on fiscal decentralization and administrative devolution; and the 18th Amendment to the Constitution, passed in 2010, which gave powers to the provinces to devise their own local government system. We will also review the proposed Local Government of 2013 and its implications for urban governance. We will assess whether municipal service delivery has improved or suffered due to these changes. We will also draw on secondary data and collect limited new data through targeted stakeholder interviews across at least three of the six major cities as noted above. Data include: Level of investment in services (national, provincial, and city level) from the Economic Survey of Pakistan (national level data); the structure and composition of revenue and expenditure (National, Provincial and City level) from federal, provincial and district level budget reports; and per capita expenditure on services by municipal government using expenditure data from federal, provincial, and district level budget reports. We will also draw on data from EDO (finance and planning) and the AG OfficePIFRA (Budget Execution Reports). Finally, because systematic data on financing at the municipal level is not widely availableand data on governance almost nonexistentwe will conduct semistructured interviews with government officials to fill gaps in data on municipal performance where feasible. The analysis will attempt to ascertain where (in which cities and for which services) gaps in services are greatest, and where high projected population growth implies the need for higher investments. If reliable unit cost data are available for specific services, we will attempt to quantify the resources needed to close current gaps or prepare for future growth We will assess the potential for increased revenue from different government tiers to expand services. Public service delivery is hampered by lack of adequate revenues in Pakistan, which has one of the lowest tax to GDP ratios (9 percent) in the South Asian region. Municipal authorities rely on transfers from the provincial governments and have little capacity to generate their own resources through taxation. In the six major cities, we will analyze the trends in and character of municipal finance arrangements, including inter-governmental fiscal transfers and internally generated revenues at the provincial and local government levels. For some cities this analysis will rely on data collected by the AERC team from municipal agencies; in others such as Karachi we expect to rely on the large body of secondary literature on these topics. We will first detail the organization of local governments in urban Pakistan and the roles of different government levels and entities in the provision of services and their revenue sources. We will then turn to an assessment of transfer arrangements under the various National Finance Commissions and analyze their contribution to efficient municipal finance management. We will also identify the constraints faced by local bodies in terms of manpower, fiscal resources, and capacity that make it difficult for governments to function efficiently. This analysis will

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be based both on reviews of official documents and publications and in depth interviews with public officials in the cities visited. Finally, we will conclude this part of the task with recommendations for how Pakistan can address urban service delivery needs in light of limited government capacity, poor governance, and current resource constraints. We will draw on quantitative and interview data from Pakistan to inform these recommendations, which will incorporate good practices from the literature and other countries in the region. Part (2) of this task is to characterize the supply, quality, and access of different groups to public services such as water, sanitation, and sold waste management. In order for cities to function well economically and provide decent lives for citizens, municipal governments need to provide reliable access to public services, including water supply, sanitation, electric power, natural gas, and roads and drains. Public services, particularly water supply and sanitation, can have important public health consequences, but also have large effects on firm performance, hence economic growth. For example, in the World Banks 2007 Pakistan Enterprise Survey, nearly 70 percent of firms selected reliable electricity provision as the most important constraint to their operations. Corruption of public officials, who are often not properly incentivized to provide services effectively, was the next most common answer, identified by over 10 percent of firms as the most important constraint to doing business. We will first provide a snapshot of access to various public services in urban areas, using household surveys. The PLSM survey (2010-11) records information on access to electricity and improved water and sanitation sources, though it does not distinguish what is provided by the public sector and what is provided privately.4 We will present shares of the population in urban areas receiving these benefits overall and by per capita consumption quantiles.5 We will supplement the analysis with a review of research that uses city case studies and smaller, more localized surveys with more detailed information on use of municipal services. Such specialized studies (including for example the JICA study on Karachis Transportation Improvement Plan mentioned earlier) will be important particularly for information on public and private transportation modes used by households in urban settings, as this is not collected in the large scale household surveys. Next we will assess how well municipal services in different cities have expanded to keep up with growing populations and urban footprints. While this question is challenging, a simple approach is to chart the trend in share of urban households accessing basic services (water, sanitation) in successive household surveys. We will rely on published reports of these shares. We will also seek data from municipal service agencies in the visited cities on trends in outcomes over time (number of roads, number of connections or households served, etc.), and match to data on population expansion in the

The Pakistan Integrated Household Survey from 2001-2 does distinguish public and private providers of water and sanitation services, but is now quite dated. 5 As before, we plan to rely on published analyses using these surveys. If these are not adequate we will plan to conduct data analysis ourselves, but given the scope of this study, our ability to do this will require the availability in the data of a validated the per capita consumption welfare indicator with appropriate regional and temporal deflators.

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same cities.6 Viewing this question explicitly from a spatial perspectivethat is, to see how access to municipal services is related to specific neighborhoods locations or distance to city centersis likely to be harder. We will rely on existing literature (including for example analyses based on the JICA study) and our interviews with various officials to ascertain whether certain locations in urban areas, or simply, those on the growing outskirts of the city, have significantly poorer access to important services such as water or electricity.

Part 2, Task 2: Integrated Land and Transport Planning In order to offer recommendations for integrated land use and transport planning in Pakistans growing cities, we will begin with a survey of historical patterns in land use and planning in Pakistan and relevant studies drawn from the region and elsewhere. The latter will focus on the historical experiences of cities worldwide, examining both how cities have coped with growing populations and have used the various policy levers at their disposal to provide access to and from city centers, regulate land use, promote public transport, and generally make cities attractive and productive places to live and work. A key focus of this review will be on the implications of the expanding use of private motorized transport (cars, motorbike, vehicles for hire). We will draw on experiences worldwide to consider how policies that reduce inter-urban transport costs, such as incentivized car ownership, improvements to transport infrastructure, or expanded public transport access, affect urban forms. Work in a variety of settings, for example, has confirmed the theoretical prediction that reductions in transport costs incentivizes commuters to locate further away from urban centers, expanding the periphery and giving rise to urban sprawl and lower density (e.g., Baum-Snow 2007). Because transport infrastructure is so crucial for the movement of goods and services between and across cities, some amount of suburbanization may be unavoidable. We will next examine how different urban policies may promote densityhence agglomeration benefitseven in the face of these and other dispersion forces. These may include subsidies for mixed-use commercial and residential buildings, incentives for encouraging the growth of consumer amenities (night life, restaurants, and entertainment), or the expansion of public transportation (including bus rapid transit), all of which aim to maximize the benefits of density while minimizing congestion costs. At the same time, too many restrictions on urban land use or other government incentive schemes may create excessive red tape that discourages business investment, or they may create opportunities for graft and corruption. Our discussion of policy alternatives will discuss these inherent tradeoffs in great detail, drawing on Pakistans experiences wherever possible. After this detailed review of issues and policies, we will focus on the experiences of Karachi in light of our findings. This will rely on reports from JICAs study on Karachis Transportation Improvement Plan (KTIP), noted above. These reports discuss survey data that was used to examine urban mobility patterns and identify dominant modes of transport used in Karachi. Such modes will be examined in
6

For firms specifically, trends can be discerned through comparison of findings from the 2005-7 and 2010 Doing Business Surveys for the cities present in both rounds.

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terms of their ease of use, safety, externalities (greenhouse gas emissions, air quality, noise), and the extent to which access and pricing of alternate modes is equitably distributed. Given the constraints and problems we find for Karachi in these data and our examination of policy alternatives, as well as what is learned from our investigation of the same issues in the other two selected cities, we will make specific policy recommendations for improvements. These will draw on the review of successful policies implemented elsewhere. They may involve identifying new policies that are currently absent from urban planning in Karachi, or recommending small adjustments to existing policies. A range of possibilities will be proposed, given that perfect implementation may be difficult to achieve or politically infeasible, and that first-best policies may not be perfectly compatible with the political economy realities of Pakistan today.

References
Abdel-Rahman, H. M. and A. Anas (2004) Theories of Systems of Cities. In J. V. Henderson and J. F. Thisse (eds.), Handbook of Regional and Urban Economics, Volume 4: 2293-2339. Ads, A. F. and E. L. Glaeser (1995) Trade and Circuses: Explaining Urban Giants. Quarterly Journal of Economics 110(1): 195-227. Alonso, W. (1964). Location and Land Use: Toward a General Theory of Land Rent, Cambridge: Harvard University Press. Au, C. and J.V. Henderson (2006) Are Chinas Cities Too Small? Review of Economic Studies, 73: 549576. Baum-Snow, N. (2007) Did Highways Cause Suburbanization? Quarterly Journal of Economics, 122(2): 775-805. Dowall, D. and P. Ellis (2007) Urban Land and Housing Markets in the Punjab, Pakistan. Berkeley Institute of Urban and Regional Development, Working Paper 2007-04. Ellison, G. and E. L. Glaeser (1997): Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach. Journal of Political Economy, 105: 889927. Glaeser, E. L. (2008) Cities, Agglomeration, and Spatial Equilibrium. Oxford: Oxford University Press. Henderson, J. V., A. Storeygard, and D. N. Weil (2012) Measuring Economic Growth from Outer Space. American Economic Review, 102(2): 994-1028. Khwaja, A. I., and A. Mian (2005) Do Lenders Favor Politically Connected Firms? Rent Provision in an Emerging Financial Market. Quarterly Journal of Economics, 120(4): 1371-1411.

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Marshall, A. (1890) Principles of Economics. Mills, E. (1967): An Aggregative Model of Resource Allocation in a Metropolitan Area, American Economic Review, 57, 197210. Muth, R. (1969) Cities and Housing: the Spatial Pattern of Urban Residential Land Use, Chicago: University of Chicago Press. Rozenfeld, H. D., D. Rybski, X.Gabaix, and H. A. Maske (2011) The Area and Population of Cities: New Insights from a Different Perspective on Cities. American Economic Review 101(5): 2205-2225. Shapiro, J. M. (2006) Smart Cities: Quality of Life, Productivity, and the Growth Effects of Human Capital. The Review of Economics and Statistics, 88(2): 324-335. Zuberi, J. (2012) Estimating the Cost of Power Outages for Large Scale Manufacturing Firms. Working Paper.

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b) Work Plan
RAND and AERC have put together an exceptional team that combines each institutions strengths in urban economics and planning, demography, transportation and other areas. To ensure the successful and timely completion of the study, we have constructed a carefully considered work plan and project management strategy. This strategy will allow the combined team to successfully navigate the ambitious project timeline and deliver to the World Bank a high-quality report that meets the World Banks needs and is responsive to the TOR. Here we describe the work plan and timeline, along with the project management strategy. To achieve the goals laid out in the TOR and described in the previous section, the RAND-AERC team has identified the set of core activities that must be accomplished to complete the report and has constructed an ambitious but realistic timeline for completing the project. RAND will lead the report preparation process and many of the tasks, with AERC leading in-country information gathering and a subset of the tasks where AERC staff have particular expertise. Both teams of researchers will participate in the overall design, strategy, and analysis in a fully collaborative fashion. The deliverables schedule will follow the TOR, reflecting the modified project end date of seven months following the contract inception (September 30th, assuming the contract is signed by midMarch 2013). Table 1 shows deliverable schedule for deadlines indicated in TOR. Activity/Deliverable Virtual project launch meeting Inception report Preliminary draft report Final draft report Finalized deliverables Project workshop(s) Date based on March 15th inception March 18, 2013 April 7, 2013 June 30, 2013 August 30, 2013 September 30, 2103 September 2013

To ensure that deliverables are completed on time we have planned our information gathering and analysis accordingly, leveraging the diverse teams of researchers from both organizations across the project activities, tasks, and subtasks. Figure 1 below shows the main project activities, including the task and task analysis. Discrete sub teams of researchers from both RAND and AERC will conduct analysis simultaneously across the projects three parts and associated tasks. The Figure indicates the core researchers associated with each activity and part/task. Inception phase activities (i.e., inception meeting, data review) will be conducted as soon as the project starts and will be jointly led by the RAND and AERC teams. Dr. Dossani and Dr. Glick will manage the inception process. The various stakeholder interviews, led by AERC and conducted in several selected cities, will also occur primarily in the first and second months of the project (the stakeholders to be interviewed are discussed under the tasks in Section A above). As Figure 1 indicates, the majority of analysis for Parts I and II will be done concurrently, and each Part will have an overall team lead to supervise data analysis and reporting. Most analysis work will begin

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immediately, although tasks that depend more on results from the stakeholder interviews (e.g., municipal governance) will commence somewhat later. Some parts of the analysis may also depend on secondary data gathered from local government agencies by AERC staff during their visits to the different cities. RAND will contribute the team leads for each of the parts, but for the individual tasks there will generally be both RAND and AERC co-leads, depending on particular expertise needed for that task. Dr. Dossani, with support from Dr. Glick, will manage the report writing, review, and revision process in close coordination with Dr. Ahmad of AERC, as well as with frequent contact with the World Bank task leader and team.
Figure 1 - Workplan
Month ( indicates deliverable) 1 2 3 4 5 6 7 Research lead/team

Project inception meeting Data accessing, compilation, and review Stakeholder interviews 1. Urbanization characteristics and dynamics 1.1 - System of cities 1.2 - Drivers of urbanization 2. Policies to manage congestion costs, enable growth, and promote livability 2.1 - Municipal governance and service delivery 2.2 - Integrated Land and Transport Planning Draft Report Final draft report Final report Workshop(s)

RAND/AERC RAND/AERC AERC Section Lead: Pollard Pollard/Butt Pollard/Fatima Section Lead: Rothenberg Dossani/Ahmed/Glick/Butt Rothenberg/Ahmed

RAND/AERC RAND/AERC RAND/AERC RAND/AERC

Workplan for new data collection Due to the timeline for this project, we are not proposing major new data collection; however, limited qualitative information gathering will be critical for specific tasks, as outlined in the approach section. The AERC team will lead the information collection activities, while the specific topics/questions/stakeholders will be jointly determined with RAND. The proposed qualitative information collection will feature:

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1. Focus group discussion (FGD) with firm managers in the three selected urban areas (2 per city) 2. In-depth interviews with a range of regional and municipal government stakeholders, as well as community leaders and residents and individuals involved in transport and planning. (quantity of each to be determined in the inception phase) The activity will take place in at least three of the six leading cities in Pakistan identified above. In the cities where we do not collect these data we will analyze the secondary literatures on these issues. Overall therefore we will capture information across Pakistans major urban areas. Reporting and communication with the World Bank To ensure that the RAND-AERC team is responsive to the World Bank and is able to adhere to the project timeline, close and frequent contact with the World Bank project team will be imperative. Dr. Glick, who is located in RANDs Arlington, Virginia office, will serve as the primary liaison with the World Bank (working closely with Drs. Dossani and Ahmad) to ensure streamlined communication channels and responsiveness. Specifically, we propose bi-weekly phone calls with the World Bank team lead during months 1, 2, 6, and 7, with monthly phone calls during months 3-5. Because Dr. Glick and several other members of the RAND team are located near Washington, DC, we welcome in-person interaction with Bank staff, as well. In addition, non-public data provided by (or access facilitated by) the World Bank will be critical to completing the project analysis on time. The RAND-AERC team will provide a preliminary draft report to the World Bank in week 14 of the project (June 30 assuming a March 15 start date). A final draft report will be delivered in week 22 of the project (currently scheduled as August 30). After receiving comments from the World Bank team and internally from RAND reviewers we will revise and submit the final report and all other materials in week 26 (September 30).

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c) Organization and Staffing


This projects success will depend critically on efficient and effective project management. To ensure high quality and timely outputs we have constructed teams from each partner organization in a way that draws maximally on RAND-AERC expertise and organizes subteams for different tasks that will work simultaneously on different components of the study. RAND, as the lead organization, will have overall responsibility for project management and will be the primary point of contact for the World Bank. Within the RAND team, Dr. Dossani will be the project lead (principal investigator, PI), given his wealth of experience conducting economic analysis and regional expertise (including a recently awarded World Bank project to study trade barriers for key industries in the South Asia region). Dr. Peter Glick will serve as co-PI, drawing on his broad international development experienceand in particular his work as co-PI for the World Banksupported study of urban poverty and evaluation of the PNPM-Urban program in Indonesia in 20112012to provide senior guidance and project oversight. Given the importance of close coordination between the RAND-AERC team and the World Bank team, Dr. Glick will also serve as the primary liaison with the World Bank, coordinating communication and providing updates. Dr. Dossani will also attend all key meetings with the World Bank and will be available as needed for consultation. Dr. Nuzhat Ahmad will lead the AERC team and serve as co-PI to Dr. Dossani. AERCs team will consist of core research staff (Drs. Norman, Butt, and Fatima) and research support staff (Ph.D. candidates) with experience in data analysis and urban research. Dr. Ahmad will be the primary point of contact for RAND and will coordinate closely with Drs. Dossani and Glick through regular email contact and bi-weekly phone calls. Each project Part (1-2) will be led by a member of the RAND team, with RAND and AERC researchers serving as co-leads for individual tasks. Dr. Pollard will manage Part 1 and Dr. Rothenberg will manage Part 2. The lead for each project part will provide weekly progress updates to the PIs throughout the project. This approach will allow the team to make progress on all three Parts (and all tasks within each part) simultaneously. RAND Research Assistants will support the core research team, assisting with data gathering, analysis, and write-up. Similarly, AERC will draw on talented PhD candidates from the University of Karachi to assist with information gathering and analysis. The management structure for the project is shown in Figure 2. We believe this structure strikes the necessary balance between efficient management, diverse team expertise, and the ambitious project schedule. The figure shows the teams for each partner organization and the management structure within and across both organizations. The green boxes also show the core communication and coordination mechanisms within the RAND-AERC team.

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Figure 2: RAND-AERC Management Structure

AERC

RAND
Rafiq Dossani Team Lead (PI)

Nuzhat Ahmad Co-PI AERC lead

Bi-weekly phone calls

Weekly team meetings

Peter Glick Co-PI Primary WB Liaison

Weekly team meetings

Michael Pollard Demography Part 1 Lead

Muhammad Sabihuddin Butt Urban Development/ Municipal finance Noman Ahmed Urban Design/Urban Poverty Alex Rothenberg Urban/Transport Economics Part 2 Lead

Ambreen Fatima PhD Urban Settlements, Labor Force analysis RAND Research Assistants

Univ. of Karachi Ph.D. Research Assistants

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Brief descriptions of each team members background and qualifications follow. RAND: Rafiq Dossani , Ph.D (Project lead). A Senior Economist at RAND, Dr. Dossanis research interests focus on business services policy including technology, higher education, private equity and venture capital policy, corporate governance, globalization and innovation in business services. Previously, Dossani was a senior research scholar at Stanford University's Shorenstein Asia-Pacific Research Center and director of the Stanford Center for South Asia. In 1999, as a member of an Indian government commission to develop rules for accessing venture capital in India, he designed rules for opening access to global institutional investors and rules for improving the governance of venture capitalists portfolio companies. In 2000, he evaluated the Bangalore operations of the Software Technology Parks of India (STPI-B) for the Indian government. In 2000, he jointly led an Indian Department of Telecommunications exercise to review the rules for telecom licensing in India, in order to improve carriers commitment to investing in telecom rollout. In 2002, he evaluated the telecom sector in Pakistan for the Pakistani government to improve foreign investment, while achieving high rollout rates. In 2002, he evaluated the venture capital sector in Pakistan for the Pakistani government to improve foreign investment inflow, while improving the supply of innovative startups. In 2012, he advised the Indian Planning Commission on the design of its five year plan on higher education, to improve quality, while maintaining a high rate of capacity expansion and equitable access. These projects required expertise in market analysis, an understanding of business services, analysis of investment climate and growth potential, evolution of supply-chains in urban clusters, policy and regulatory design, antitrust economic analysis, competition advocacy, national innovation system design, and competitive neutrality. Dossani has worked for the Robert Fleming Investment Banking group, as CEO of India operations and as head of San Francisco operations. He has authored/edited books including, Higher Education: Triumph of the BRICs? (2013), Knowledge Perspectives of New Product Development (2011), and Telecommunications Reform in India (2002). Dossani holds a B.A.(Economics) from St. Stephen's College, New Delhi, India; an MBA from the Indian Institute of Management, Calcutta, India; and a Ph.D.(Finance) from Northwestern University. Dr. Dossani will leave the joint RAND-AERC team and lead the team working on Part 2. Peter Glick, PhD (co-project lead) , is a Senior Economist at RAND and Director of the Center for Research and Policy in International Development within RANDs Labor and Population Unit. He has more than 20 years experience in research on economic development, with a focus on employment, education, and poverty. He recently co-led a large study of urban poverty in Indonesia for the World Bank that analyzed patterns and trends in poverty and access to municipal services and infrastructure. The study also evaluated the PNPM-Urban program, a major community driven development program focused on local urban infrastructure development. Among current projects, Dr. Glick is co-leading a project in the Kurdistan Region of Iraq to develop a labor force survey and build capacity within the Kurdistan Region Statistical Office, and is a co-investigator on a project to advise the Kurdistan government on labor market and other strategies to increase private sector growth and employment. Dr. Glicks extensive research on labor markets in developing countries has also examined the impacts

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Selection No. _________ Technical Proposal Annex 1

of education and training on earnings, the determinants of private and public sector employment, patterns in womens labor force participation, and youths entry into the labor market. His education research has used survey and test score data to analyze such topics as school progression, skills acquisition, private-public school choice, the effects of school and teacher quality on education outcomes, and gender differences in schooling and skills. In the area of poverty and access to services, Dr. Glick has conducted numerous studies on the benefit incidence of health and education service and infrastructure provision. Dr. Glick has consulted for governments and many international organizations, including the World Bank, Millennium Challenge Corporation, UNDP, USAID, and the African Development Bank. With Dr. Dossani, Dr. Glick will lead the project, and will oversee the quantitative analysis and act as primarily liaison (in Washington) with the World Bank. Dr. Glick will co-lead the RAND team and serve as the primary communication liaison between RAND-AERC and the World Bank. Alexander D. Rothenberg (Ph.D., Economics, University of California, Berkeley) is an associate economist at RAND specializing in research on transportation and urbanization in developing countries. He is an applied micro-economist with a strong background in econometrics, program evaluation, development, international trade, and urban economics. Alex has extensive experience with structural econometric modeling and has ongoing research on a variety of projects, including an evaluation of the effects of improvements to transport infrastructure on firm location choice in Indonesia and an estimation of willingness to pay for access to transport infrastructure in Honduras. Dr. Rothenberg will lead Part 2 of the analysis and contribute to multiple tasks on Part 1. Michael S. Pollard, Ph.D. (Sociology, Duke University), is a full behavioral/social science researcher at RAND. Dr. Pollard has extensive research experience utilizing demographic methods including population projection, fertility, and mortality. Dr. Pollards previous population projection work includes analysis of Kurdistan and New Orleans post Hurricane Katrina both settings with sparse data. Dr. Pollards ongoing work includes an examination of the role of migration on health. Dr. Pollard will lead analyses and contribute to the writing relevant to Part 1. with a focus on migration and population projection. AERC: Prof. Dr. Nuzhat Ahmad (Ph.D., Economics). from University of Sheffield, UK and a Masters in Applied Economics from the University of Karachi. She has over 25 years of experience in research, post graduate level teaching and providing advisory services to the Government. Dr. Ahmad has worked the World Bank, Asian Development Bank, UN Agencies, USAID, Inter-Agency Gender and Development Group, DFID, Overseas Development Institute, Harvard International Institute of Development, and the Aga Khan Foundation. She has worked in the fields of urban and regional development, public finance, poverty and social development, governance, service delivery and health and education. Dr Ahmad has experience of working extensively throughout Pakistan including several field studies in the urban and rural areas of Sindh, Punjab and NFWP provinces. She has also worked on Afghanistan and Saudi Arabia. As the Poverty Policy Advisor to the United Nations Development Program, her research and work took her to many African and Latin American countries, where she represented UNDP at high level

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Selection No. _________ Technical Proposal Annex 1

forums. Dr Ahmad is a Director on the Board of the Pakistan Poverty Alleviation Fund. She has been a member of various advisory bodies constituted by the Government of Pakistan, for policy formulation including Prime Ministers Task Force on Poverty Alleviation, Task Force on Urban Development, Provision of Services and Poverty Alleviation, Resource Mobilization and Public Expenditure Management. Dr. Ahmad was also the Editor of the Pakistan Journal of Applied Economics, an internationally refereed journal in applied economics, from 1996 to 2005. She has acted as editor for papers by Urban Studies, a leading journal published in the U.K. Dr Ahmad will act as co-PI on the project and oversee all activities of the AERC team as well as participate in analysis on several of the project tasks. Mr. Sabihuddin Butt is currently a Senior Research Economist/ Associate Professor at the Applied Economics Research Centre, University of Karachi. He has over 30 years of research experience e of working on urban development, housing, public finance, trade and service delivery for international organizations like the World Bank, Asian Development Bank, UN Agencies and national provincial and local government. He has published extensively in peer reviewed journals in areas of urbanization and population growth, housing, local government administration and finance, institutional development and health. His work has involved sophisticated modeling and econometric techniques. A good part of his research has been based on large primary data sets. He has advised government and municipal development authorities and participated in World Bank missions on a number of occasions. He teaches Monetary Economics, Project Evaluation and Macroeconomics at the post graduate level. He is currently the editor of the Pakistan Journal of Applied Economics an internationally refereed journal published by the Applied Economics Research Centre. Dr. Butt will serve as the AERC lead on multiple tasks in both parts of the project. Professor Dr Noman Ahmed is currently the chairperson of Architecture and Planning Department at the NED University, Karachi. He has undertaken many assignments related to urban and regional planning in Pakistan and abroad. Some recent mentions include Team Leader of Sustainable Urbanization Programme that comprised documentation, analysis and proposal development exercises of eight secondary cities in Pakistan for UNHABITAT; member of a task force on urban governance formed by the Planning Commission, Government of Pakistan; Advisor to a consulting team that prepared Hyderabad Master Plan for District Government in Hyderabad; collaborate partner in preparing Karachi Land Study for International Institute for Environment and Development in UK and evaluator of technical proposals for development of Zulfiquarabad for Zulfiquarabad Development Authority. Dr. Ahmed will serve as the AERC co-lead on Part 2, Task 2. Dr. Ambreen Fatima, (PhD, Economics), a Staff Economist at the AERC, recently completed her PhD from the University of Nottingham in the United Kingdom. She also has an M.Phil from the University of Karachi. She was the recipient of a scholarship from the Applied Economics Research Centre. After joining AERC in 2002 she has worked on six different projects for funding bodies like International Labour Organization, Asian Development Bank, The World Bank and Government of Sindh. From these projects she has gained excellent skills ranging from designing framework for the study to report writing. She has worked on two projects related to urbanization, one of which was to design the resettlement action plan for the affected persons of the project Revival of Karachi Circular Railway. In order to prepare the resettlement plan information was gathered on the socio-economic

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aspects of project affected persons. A census was conducted for the entire housing units affected by the project. Dr. Ambreen was part of the team that conducted the socio economic analysis. The study was done for the Environmental Management Consultant and the project was funded by JICA. She also worked on a project assessing the housing finance situation in large cities of Pakistan. The project focused on the urban housing issues related to large cities like Karachi, Lahore and Islamabad/ Rawalpindi. The project highlighted the weaker portion or missing links in the current framework for housing in Pakistan and tends to make recommendations that are likely to make the framework more functional and conducive to the issues in obtaining situation. The study used a combination of information generated through detailed discussions with different stakeholders e.g. bankers, developers, government officials, housing consumers through household surveys in Karachi, Lahore and Islamabad/Rawalpindi. Her role in the project was not only to conduct the discussions/survey but also to conduct all the analysis based on which a comprehensive report was prepared. The project was funded by Muslim Commercial Bank of Pakistan. In addition to these studies, part of her Ph.D dissertation assessed the effect of labour market conditions (from 1990-91 to 2007-08) on child labour incidence. Finally, she has also worked on Pakistan Standard of Living Measurement Survey and Household Integrated Economic Survey. Dr. Fatima will support multiple tasks on this project and be AERC co-lead on drivers of urbanization (Part 1, Task 2).

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Selection No. _________ Technical Proposal Annex 1

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