Semester Offering: January

In view of the importance of urban economics and finance for urban planning, management and environmental management, this course is designed to provide an understanding of the operation of urban economics, local government finance and financing of urban infrastructure and services. The course aims to provide a critical understanding of the economics governing urban development and the contexts within which the city economy operates. The course covers privatization of various forms of public-private partnerships, the potential of foreign direct investment (FDI) and cost recovery through user charges are assuming increasing significance in the urban service provisions. Its central concern is to identify methods of enhancing urban productivity and mechanisms of promoting sustainability and equity at the city level.


Upon completion of this course, the students will be able to:

1.  Assess the operation of urban economics, local government finance and financing of urban infrastructure and services.
2.  Apply the concept of urban economy and environment linkage for addressing and managing specific issues.
3.  Develop a working plan by applying principles of economics and finance in specific urban contexts and issues.




I.   Market Forces and Role of Government in the Development of Cities
1.   Locational Factors
2.   Comparative Advantage of Cities
3.    Scale and Agglomeration in Economies
4.    The Role of Government

II .Contribution of Urban Economy to National Economy
1.  Urban Economy and National Economy
2.  Cities’ Competitiveness
3.  Local Economic Development
III. The Dichotomy in the Urban Economy and Environment
1.  Affluence and Poverty
2.  Formal and Informal Sector
3.  Modern Housing and Slums
4.  Modern Infrastructure and Poor’s Makeshift Living

IV.  Specific Urban Markets
1.   Urban Land, Labour and Housing Markets
2.   Housing Economics
3.   Transportation Economics.

V.  Financing Urban Infrastructure and Services
1. Traditional Sources of Municipal Financing
2. Urban Financing Methods and Techniques
3.  Development Impact Exaction
4.  Cost Recovery
5.   Pricing of Urban Services

VI. New and Innovative Approaches to Financing Urban Infrastructure
1.         Global Capital Market
2.         Privatization
3.         Foreign Direct Investment
4.         Innovative Form of Project Financing

VII.    Public Policy for Financing and Managing the Urban Environment
1.  Pollution and Congestion Pricing
2.  Public Goods Pricing
3.  Community Participation




1.  O’Sullivan, A. (2011). Urban Economics, McGraw-Hill, New York, (8th Edition)


1. Asafu-Adjaye, J. (2005). Environmental Economics for Non-Economist, (2nd Edition), World Scientific Publishing, Singapore.
2.Capello, R. and Nijkamp, P. (2004). Urban Dynamics and Growth: Advances in Urban Economics, Elsevier B.V, the Netherlands. 
3. O'Sullivan, T. and Gibb, K. (2006). Housing Economics and Public Policy, Blackwell Science, Malden, USA.
4. Broakman, R. A. C. and Williams, A. (ed.) (1996). Urban Infrastructure Finance, Asian Development Bank, Manila.
5.  Oxley, M. (2004). Economics, Planning and Housing, Palgrave Macmillan.


1.  Environment and the Development Economics, Cambridge University Press
2.  Environmental Economics and Management, Elsevier
3.  World Development, Elsevier
4.  Development Economics, Elsevier
5.  Urban Economics, Elsevier

1.  The World Bank (2003). Local Economic Development – LED Quick Reference.
2. AfDB (2010). Guidelines for User Fees and Cost Recovery for Urban, Networked Water and Sanitation Delivery.       
3. GTZ (2001). Economic Instruments for Sustainable Road Transport.
4. CDIA (2010). Linking Cities to Finance: Overcoming Bottlenecks to Financing Strategic Urban Infrastructure Investments.
5. UN-HABITAT (2011). The Economic Roles of Cities.
6.  OECD (2009). Competitive Cities and Climate Change.
7.  ADB (2008). Managing Asian Cities – Sustainable and Inclusive Urban Solutions.
8.  UN-HABITAT (2009). Guide to Municipal Finance.
9.   ADB (2011). Competitive Cities in the 21st Century – Cluster-Based Local Economic Development.
10. Cardone, R. and Fonseca, C. (2003). Financing and Cost Recovery, IRC International Water and Sanitation Centre.
11. McMaster, J. (1991). Urban Financial Management – A Training Manual, the World Bank.


·         Lectures                                                       : 45 hours
·         Self-study including required readings: 90 hours
·         Assignment                                               : 30 hours
·         Group discussions and presentations: 15 hours


The teaching and learning methods involves lectures using multimedia presentation slides, assignments, and group discussions and presentations. Instruction manual and lecture outline are used as a base for focus of course delivery.


The final grade will be computed from the following constituent parts: mid- semester exam (30%), final exam (40%), and assignments (30%). The mid-semester and final exams are closed book.

An “A” would be awarded if a student can elaborate the knowledge learned in class by presenting his/her own analysis from the relevant journal articles and required readings. A “B” would be awarded if a student shows an overall understanding of all topics, a “C” would be awarded if a student meets below average expectation on both knowledge and analysis, and a “D” would be given if a student does not meet basic expectations in analyzing or understanding the issues given in the course.