With rapid urbanisation in the developing world comes contagion, crime, and congestion. Overcoming these is one of the great policy challenges of the 21st century.

Key messages

  1. Cities and urbanisation encourage economic growth in the developing world.

    The relationship between urbanisation and income is stronger today than it was in 1960, reflecting the positive effect that increased density can have on cities worldwide. In addition, cities encourage national economic growth and improved governance.

  2. Contagion, crime and congestion are important challenges, yet they are often poorly managed and understood.

    However, cities cannot avoid the downsides that come from density – contagion, crime, and congestion. Public investments in these areas are costly and hard to manage, especially as urban governments are often under-resourced and plagued by inefficiencies. There is therefore a need for economists to closely study these issues in developing countries.

  3. We also need to understand and encourage one of the benefits of urbanisation – upward mobility out of city slums.

    On the contrary, upward mobility is the the potential of urbanisation to lift people out of poverty by delivering higher earnings and a better quality of life, especially when compared with the rural alternative. It is important to understand how cities deliver prosperity by gathering data and by testing low-cost interventions to encourage upward mobility

This brief outlines why these issues are so important to the prosperity of cities and discusses ways to tackle them, providing useful lessons for policymakers. It also identifies opportunities for economists to get engaged in the field of urbanisation studies in developing countries.

Across the world, developing countries are urbanising at impressive rates and this trend is set to continue. Urbanisation is essential for these countries to move from poverty to prosperity. Yet one cannot ignore the considerable downsides that come with this increased density – notably contagion, crime, and congestion. Most cities have suffered from at least one of these problems in recent years; some places suffer regularly from all three. Tackling these are some of the primary challenges of urban government today. To tackle these downsides, well-functioning urban governments must commit massive amounts of expenditure. However, today, mega-cities are emerging in places that are both poor and poorly governed. These constraints make it particularly difficult to solve urban problems and mean that the approaches used by developed countries cannot be facilely imitated. While the aforementioned “downsides of density” can be terrible in and of themselves, they carry an additional cost. They seem to provide a coherent rationale for why the growth of cities in the developing world should be limited. That conclusion is incorrect. The millions of migrants who come to cities, despite their problems, remind us of the bleak future presented by rural poverty. The right conclusion is that the world needs to make its poorer cities better places, and research is a critical part of that task.