rural-urban migration

Copyright 2012 Pearson Addison-Wesley. All rights reserved. 7-1

Urbanization and Rural-Urban Migration: Theory and Policy

Chapter 7

Corso Economia dello Sviluppo

a.a. 14/15

20/04/2015

Matilde DAmelio: [email protected]


7.1 The Migration and Urbanization Dilemma

By 2050 world population: 9 billion

In 2008 for the first time urban population becomes more then rural one (Source: UNDP)

As a pattern of development, the more developed the economy, the more urbanized

But many argue developing countries are often excessively urbanized or too-rapidly urbanizing

This combination suggests the migration and urbanization dilemma


7.1 The Migration and Urbanization Dilemma

In developed countries: rural urban migration has been gradual and related to the industrialization of the economy (agriculture became less and less important) Lewis theory

In developing countries: massive migration not necessarily related to drastic industrialization, leading to high rate of unemployment


Index

Urbanization: Trends and Projections

Theoretical model of rural urban labor transfer

Policies forecasted for developing countries to mitigate the phenomenon and solve related problems


Figure 7.1 Urban Population and Per Capita Income across Selected Countries

World Bank says:

Strict relationship between economic development and urbanization-rate

However

Todays poorest

countries are fare

more urbanized

then todays

developed countries

where they were at

a comparable level

of development


Figure 7.2 Urbanization across Time and Income Levels


Figure 7.2 Urbanization across Time and Income Levels

Even when shrinking income,

urbanizations occurs

Urbanization it is really correlated

only to economic growth?


Figure 7.3 Proportion of Urban Population by Region, 1950-2050

1950: 275 million people

lived in cities in

developing countries

(38%)

2010: 3.4 billion people

lives in cities in developing

countries (3/4)

2030: 50% of population

will live in cities in Africa

and Asia


Figure 7.4 Megacities: Cities with Ten Million or More Inhabitants

Developing world is going

to dominate the worlds

largest cities, including

Megacities

(>10 million people)

1975: 5 megacities (2 in

developed countries)

2009: 21 megacities (2/3

in developing countries)

2025: 29 megacities (5 in

high income countries)


Figure 7.5 Estimated and Projected Urban and Rural Population of the More and Less Developed Regions, 1950-2050

Urbanization growth

is associated to an

overall and massive

population growth in

developing countries



Can cities support (economically, environmentally and politically)

this acute and rapid concentration of people?

- Cost reduction (economies of scale and proximity)

- Positive social and economic externalities ( skilled worker, cheap

transport, cultural and social amenities)

BUT

- High cost of congestion (pollution, crime, lack of human and

physical infrastructures, overcrowding, illegal housing)

Creation of massive slum settlements


Figure 7.6 Annual Growth of Urban and Slum Populations, 1990-2001


Index





7.2 The Role of CitiesWhy urbanization historically associated to development?

Agglomeration economies produce cost reduction, they can be: Urbanization (general growth of a concentrated geographic region) economies, localization (industry or sector) economies

Saving on firm-to-firm, firm-to-consumer transportation

Firms locating near workers with skills they need

Workers locating near firms that need their skills

Firms benefit from (perhaps specialized) infrastructure

Firms benefit from knowledge spillovers in their and related industries

(Also: consumers may benefit from urban amenities)


Industrial Districts and Clustering

Quality of clusters, or Industrial Districts, is a key to sectorial efficiency. This come from:

- governmental policies

- social capital (set of social institutions and norm)

Unfortunately a majority of developing countries have made only limited progress (most of them still related to artisanal sector)

China: a country that has made huge strides in generating industrial districts over the last decade (see the case of China)


Urbanization Costs, and Efficient Urban Scale

But, cities also entail congestion costs: high costs of living that requires high wage

1) High density high cost of real estate (beni immobiliari) and it is much more costly to build vertically

2) High infrastructures (transport, sanitation, education etc.)


7.3 The Urban Giantism Problem Transportation are generally a heritage of colonialism and it is

generally a hub-spoken system: transportation is used to extract and transport natural resources and to move troops. This is why most of capital cities are not on the cost -> LOCATION BIAS

In developed countries when the size of the city does not allow to reduce anymore the cost other cities or other city centers are development (generally in less costly areas) in order to still benefit of economy of scale and proximity

in Europe, public sector coordinate new town and industrial districts creation and the large development (e.g., IRELAND)

In developing countries, governments are not enough strong and effective: or they do any good industrial district policies or they concentrate all activities in the capital or oder urban giants . FIRST CITY BIAS


7.3 The Urban Giantism ProblemFIRST CITY BIAS

Developed countries:

- Toronto 15% national population (no)

- New York 6% np

Developing countries:

- Mexico city 20% np

- Lima 25% np

- Buenos Aires 33% np

First city bias:

The countrys largest or first place city receives a disproportional large share of public investment and incentives for private investment in relation to the countrys second largest city and other small cities. As a results, the first city receives a disproportionately-and inefficiently- large share of population and economic activity


Table 7.1 Population of the Largest and Second-Largest Cities in Selected Countries (millions)


7.3 The Urban Giantism Problem

Causes of Urban Giantism:

- Combination of hub and spoke system and location

of political power in the first city

- Protectionist policies: to avoid transportation costs

more incentive to concentrate in a city most of

economic activities.

Bread and circuses to prevent unrest (Figure 7.7: stable democracies vs unstable dictatorships)

Easier to be close to political power in order to easily have favor (corruption)

High security in the capital (mainly in countries affected by conflicts)


Figure 7.7 Politics and Urban Concentration


7.4 The Urban Informal Sector

Urban economy composed by formal and informal sector

Informal sector: unorganized, unregulated and mostly legally but

unregistered sector that comprise a large number of small-scale production

and service activities individually of family owned and use simple and labor-

intensive technologies.

People involved in informal sector are generally: less skilled, less educated

without access to financial capital

Most of informal activities are in slums and provide sufficient income just to

survive

Informal sector is a PANACEA for growing unemployment rate, mainly for

youth (Figure 7.9, a vast majority of migrants are between 15 and 24).

rural-urban creation exceeds the rate of job creation social services in urban

areas

Almost 50% of urban population work in informal sector (Figure 7.8)


Figure 7.8 Importance of Informal Employment in Selected Cities


Figure 7.9 Youth Unemployment Rates, 1995 and 2005



Why institutions should recognize informal sector and promote it?

Absorbs labor that formal sector cannot, creating lot of jobs with low capital intensity (higher income than rural areas, lower income then formal urban sector)

Generates income opportunity despite hostile environment (e.g., no access to finance)

Access to (informal) training, and apprenticeships

Creates demand for less- or un- skilled workers

Uses appropriate technologies, local resources

Recycling of waste materials

More benefits of development to poor, especially women who are concentrated in the informal sector



What are the disadvantages of promoting informal sector?

Promoting income and employment opportunities with informal sector will increase the problem of rural-urban migration and urbanization gigantism

Congestion costs (e.g., environmental pollution or vendors)

Increasing density of slums



How to regulate informal sector?

Be sure that when jobs will be available in the formal sector people will move to it

Facilitate training in order to drive informal sector versus activities more value added for the society

More credit more income (e.g., microcredit)

Access to improved technologies

Provide infrastructures and suitable locations for work

Promotion of informal sector in rural areas could redirect the flow of rural-urban migration



Women in the Informal Sector

New phenomenon: increasing number of single woman migrating to urban areas

- few find job in the formal sector (less skilled

and educated)

- Less access to capital and training

- More problem of malnourishment, health care, clean water and sanitation, education

polices should consider even them! (targeted policies)


Index





7.7 Summary and Conclusions: A Comprehensive Migration and Employment Strategy

Create a urban-rural balance

by developing rural areas (improving credit access, investments, institutions, infrastructures)

Expand small-scale, labor intensive industries (in rural and urban areas)

allowing the creation of jobs and potentially of industrial districts leading to employment and economic development

Choose appropriate labor-intensive technologies of production

most of technologies are imported from developing countries (dependency) research and adaptation should be developed at local level, allowing the development of local enterprises and of technological solutions that meet local needs and conditions


7.7 Summary and Conclusions: A Comprehensive Migration and Employment Strategy

Modify the linkage between education and employment

is the massive expansion of high education the right instruments to reduce migration and improve employment?

At lease it should be redirected towards needs of rural development

Reduce population growth

and all related problems such as poverty and inequality

Decentralize authority and tax revenues to cities and neighborhoods

In order to improve quality of public services (more incentives)

rural-urban migration

Documents

pearson addisonwesley

urbanization growth

ruralurban migration

rural urban migration

rural population

time urban population

urbanization dilemmacopyright

index urbanization