Urbanization and the Geography of Development

Abstract

This paper focuses on three interrelated
 questions on urbanization and the geography of development.
 First, although we herald cities with their industrial bases
 as "engines of growth," does industrialization in
 fact drive urbanization? While such relationships appear in
 the data, the process is not straightforward. Among
 developing countries, changes in income or industrialization
 correlate only weakly with changes in urbanization. This
 suggests that policy and institutional factors may also
 influence the urbanization process. In fact, the
 relationship between industrialization and urbanization is
 absent in Sub-Saharan Africa. Second, do development
 policies have a big-city bias and, if so, what does this
 imply for growth and inequality? Intelligent public
 infrastructure investment inevitably involves picking
 winners. One hopes that such choices are based on market
 indicators, such as where industry is starting to
 agglomerate and where there are clear needs. Yet governments
 seem to favor the biggest cities which in turn draw firms
 and migrants to these cities. To try to avoid excessive
 in-migration and oversized, congested cities, favored cities
 might adopt policies that make living conditions for
 migrants more unpleasant. This can result in increased
 inequality and social tension. Finally, the paper examines
 city sizes and city-size distributions. Factors determining
 both aspects are complex and poorly understood. It is hard
 to be proscriptive about either individual city sizes or
 overall city-size distributions. The best policies
 strengthen institutions in the relevant markets so that
 market forces can move the economy toward better outcomes.