Planning Ahead for Better Neighborhoods: Long Run Evidence from Tanzania

February 16 2018

Africa’s demand for urban housing is soaring, even as it faces a proliferation of slums. In this setting, can modest infrastructure investments in greenfield areas where people subsequently build their own homes lead to better quality neighborhoods in the long run? We study "Sites and Services" projects implemented in seven Tanzanian cities during the 1970s and 1980s, and we compare greenfield areas that received basic infrastructure investment (de novo areas) to geographically proximate greenfield areas that did not (control areas). Using satellite images, surveys, and census data from the 2010s, we find that de novo areas developed into neighborhoods with much better housing quality. Specifically, de novo neighborhoods are more orderly and their buildings have larger footprint areas and are more likely to have multiple stories and better amenities, due not only to the persistence of initial investments but also to private complementary investments. We also document the role of sorting of owners and residents, which only partly accounts for the differences in housing quality across neighborhoods. Finally, we study initially squatted areas that were also upgraded as part of “Sites and Services”, and our descriptive evidence suggests that they are now if anything worse than the control areas. We conclude that preemptive infrastructure investments can lead to neighborhoods with significantly better housing in the long run.

Reject and Resubmit, Journal of Political Economy

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Guy Michaels is an Associate Professor in the Department of Economics at the London School of Economics and Political Science (LSE) and a research associate at Centre for Economic Performance (CEP) at the LSE.

Dr. Ferdinand Rauch is Associate Professor of Economics and Tutorial Fellow at Brasenose College, both at the University of Oxford.  His research interests are in international trade and urban economics.

Tanner Regan is a PhD student at the London School of Economics and works in the Urban and Spatial Programme at the Centre for Economic Performance. He is broadly interested in urban, spatial, and development economics with a current focus is on the role of slums in shaping the built environment of African cities. He has ongoing work with the Urbanisation in Developing Countries Programme based at LSE and Oxford.

Amanda Dahlstrand-Rudin