Policy Brief

Urban failures, political gains: how shadow interests shape new city development

Goedeking, Nicholas / Lena Gutheil / Michael Roll
Policy Brief (28/2026)

Bonn: German Institute of Development and Sustainability (IDOS)

DOI: https://doi.org/10.23661/ipb28.2026

The development of new cities has become a defining feature of contemporary global urbanisation. More than 150 new cities are currently in planning worldwide, predominantly in low- and middle-income countries. While new city projects often claim to address pressing urban challenges, many such initiatives fail to achieve their stated urban development goals. A significant number of new city developments, for example, remain underpopulated or entirely abandoned. Yet despite this mixed record, over 40 governments continue to promote their construction. In this policy brief, we argue that shadow interests – hidden political economic interests pursued by powerful elites – explain why certain governments continue to promote new city developments even when they fail. New cities can significantly underperform regarding their stated urban development objectives and nevertheless serve hidden political agendas very effectively. Urban failures must therefore not preclude political gains. Three examples illustrate our argument: new town planning in Egypt between the 1970s and 1990s, Masdar City in Abu Dhabi and Forest City in Malaysia. In all three cases, political goals complemented urban development objectives, and some of these political goals were realised even after the projects themselves fell short of their declared urban development goals. We recommend that international development actors, including donor governments, multilateral development banks and bilateral development agencies, exercise particular caution when invited to participate in new city developments. Even though many of these projects claim to tackle pressing urban challenges, their stated urban objectives must not necessarily reflect their underlying political economic motivations. Any technical or financial support ideally builds upon two complementary analyses: first, a political economy analysis of the interests motivating the project, including potential shadow interests; and second, an alternatives analysis comparing the proposed project with more limited and incremental interventions in existing cities. Incorporating such analyses into project approval processes will help discipline public and private investment in urban development and thereby reduce the risk that new city developments serve the interests of political elites rather than the needs of urban residents.