Introduction

The world population growth will be spiky, as I noted in the Population series 2. There is one trend that also contributes to the spikiness of growth. It is urbanization – the relative increase of urban population.

Urbanization has developed in two waves. The first urbanization wave took place in North America and Europe over two centuries, from 1750 to 1950. In the second wave of urbanization, the urban population in the less developed regions will go from 2.6 billion in 2010 to 5.1 billion in 2050. In other words, in only 40 years there will be 2.5 billion more urbanites in the developing world. Urban populations in the developed world will grow only marginally during the same period.

This trend obviously presents extreme challenges for developing countries. Let’s see where these challenges are.

Large Cities and Megacities

The large cities – over 5 million inhabitants, will grow significantly during the next few decades. The number of megacities - with at least 10 million inhabitants is projected to increase to 29 in 2025, at which time they are expected to account for 10.3 per cent of the world urban population. The large and megacities are and will remain dominant in Asia, Latin America and the Caribbean (check out this BBC map of large cities and megacities).

But why is greater share of the urban population of developing countries concentrated in large cities? Some research points to the elasticity of labor supply, high economies of scale, and low transportation costs. This means that in the future the urbanization model of developing countries may shift due to the expected higher transportation costs.

We also know that large cities and megacities are fuelled by migration. In response, 72 per cent of developing countries in 2009 reported policies aimed at reducing migrant flows to large cities.

Large cities in developing countries and megacities in particular, are well known for a very serious problem that they share – the slums. We now have some empirical understanding that city authorities faced with rapid urban development lack the capacity to cope with the diverse demands for infrastructural provision to meet economic and social needs. Squatter and slum settlements have formed mainly because of the inability of city governments to plan and provide affordable housing for the low-income segments of the urban population. Today one billion people are estimated to be living in either slum or squatter settlements. South Asia has the largest share, followed by Eastern Asia, sub-Saharan Africa and Latin America.

There is more. Some slums now have grown considerably, and shelter millions of people in large “slum corridors” or “slum belts” (you can see a list of such “megaslums” here).

Smaller Cities and Towns

The smaller cities (under 5 million inhabitants) and towns (under 1 million inhabitants) are an important venue for the urbanization of developing countries. Between 2009 and 2025, small urban centres with fewer than half a million inhabitants are expected to account for 45 per cent of the expected increase in the world urban population. On one hand, this sounds like good news, because smaller cities and towns allow for a more balanced trend of urbanization. Indeed, many countries especially in Asia have tried to contain metropolitan expansion by the development of satellite towns. These towns, however, are in locations in close proximity of the first and second order cities. This has led to the expansion of the boundaries of agglomerations and merging of old and new towns with the central city.

This trend poses a new threat – of the so-called “degenerated periphery”, where more polluting and economically unattractive businesses are relocated.

In order to be successful, small towns must have high potential for employment generation and economic growth. Small town municipalities should also have greater authority for development planning, budgeting, revenue generation, and infrastructure investment

Managing Urbanization

The push for urbanization in developing countries can be overwhelming. We saw that poor governance was the main reason for the development of slums. Other impacts such as environmental degradation should not be underestimated.

The main issue remains sustainable urbanization management. But it is really difficult to achieve sustainability with so scarce resources. One survey by the McKinsey Global Institute showed that in India, an eightfold increase in investment was needed to meet the needs of fast and sustainable urbanization. MGI numbers possible resources for such a surge in investment:

• monetizing land assets;
• collecting higher property taxes;
• introduction of cost-based user charges;
• issue of debt;
• public-private partnerships;
• formula-based government funding.

I believe that financing will NOT be the crux of (un)sustainable urbanization. The reason is simple – corruption. There is very little proof that increasing urbanization will, by itself, diminish current levels of corruption in developing countries. Corruption, if left unchecked, leads to lower levels of human development. That is why while stressing that urbanization is a great opportunity for the improvement of human development, we must not overestimate its significance.

Environmental Impacts of Urbanization

This topic will be covered in a separate post. However, I would like to hint here that the sustainability assessment approach allows us to see the positive benefits of urban growth and provides policy options that can help cities reduce their local and global impact.

Conclusion

Urbanization is here to stay. More and more people in developing countries will become urbanites during the next decades – either by birth or migration. But the policies driving urbanization, the levels of capital investment, and the effective prevention of corruption will define the relative success or failure of this coping strategy.