Key message 1 – Cities and urbanisation encourage economic growth in the developing world

Over the last fifty years, urbanisation has increased rapidly in developing countries, and this trend is set to continue. By 2030, the developing world’s urban centres are expected to absorb 96 percent of the additional 1.4 billion people that will be added to the world’s population. The last fifty years have shown a strong correlation between urbanisation and income (GDP per capita), as evidenced by Figure 1. Nine countries where IGC works have been highlighted showing a similar upward trend. This outcome reflects the effect of increased density, rather than the idea that cities attract more talented people (Combes et al 2010).

Yet there is also no avoiding the downsides that come from density. So often, urbanisation has led to contagious diseases, crime, and congestion. This is not inevitable. If well managed, cities can be places of health and safety. But the high quality of life that permeates wealthy cities does not come cheaply. Urban infrastructure, from sewers to subways, is notoriously expensive and must be properly sequenced. Policing public spaces is also costly. Developing country cities are trying to solve protracted urban problems without enough resources.

Moreover, the provision of public services becomes even harder if public institutions are weak. Policing can become ineffective if the police are corrupt. Infrastructure can go wrong in many ways, from the routine corruption of overpaying for supplies and labour, to the massive misdirection of projects towards politically favoured constituents. Global history is replete with examples of waste and corruption in urban government.

However, there are reasons to be hopeful about developing country urbanisation, even when their cities appear dysfunctional. It is far easier to imagine economic growth coming to these cities than to subsistence farmers. It is far more plausible that the citizens of these cities will effectively organise for political change and improved governance. It is far more likely that participatory governance will occur in urbanised countries. To reap these benefits, policymakers must tackle these “downsides of density”, supported by research findings applicable to local contexts.

Figure 1: The impact of urbanisation on GDP

1 Bangladesh, Ghana, India, Liberia, Pakistan, Rwanda, Sierra Leone, Uganda and Zambia.