Growing a Developing City: A Computable Spatial General Equilibrium Model Applied to Dhaka

53 Pages Posted: 4 Mar 2019 Last revised: 5 Mar 2019

See all articles by Julia Bird

Julia Bird

World Bank

Anthony J. Venables

University of Oxford; Centre for Economic Policy Research (CEPR)

Date Written: March 1, 2019


As one of world's fastest growing cities, Dhaka faces acute challenges in housing its growing population and developing a more productive economy. Central to this is the scarcity of high-quality urban land. Yet a vast tract of land near the heart of the city, East Dhaka, currently remains predominantly agricultural and undeveloped as a consequence of flooding. This paper uses a computable spatial general equilibrium model that captures the economic geography of the city, to estimate the economic returns of coordinated action to develop this land. The model captures different productive sectors, household skill levels, and types of housing. Firms and residents choose their location within the city given the transport network and land availability, generating a pattern of commercial and residential land-use. The paper estimates the incremental impacts on income, employment and population of an embankment and other flood protection measures to protect this land, as well as from improvement in transport infrastructure and targeted support for economic development in East Dhaka.

Keywords: Transport Services, Urban Housing and Land Settlements, Urban Housing, Municipal Management and Reform, Urban Governance and Management, Pulp & Paper Industry, Plastics & Rubber Industry, General Manufacturing, Textiles, Apparel & Leather Industry, Construction Industry, Business Cycles and Stabilization Policies, Food & Beverage Industry, Common Carriers Industry, Labor Markets

Suggested Citation

Bird, Julia and Venables, Anthony J., Growing a Developing City: A Computable Spatial General Equilibrium Model Applied to Dhaka (March 1, 2019). World Bank Policy Research Working Paper No. 8762, Available at SSRN:

Julia Bird (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Anthony J. Venables

University of Oxford ( email )

Mansfield Road
Oxford, Oxfordshire OX1 4AU
United Kingdom

Centre for Economic Policy Research (CEPR)

United Kingdom

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