Urbanization? Of course! But how?

The world reached 50 percent urbanization some years ago. By 2020, the less-developed world will have followed suit. Harvard economist Edward Glaeser’s vivid 2011 paperback “The Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier” leaves no doubt about it. Cities set in motion a virtuous machinery of agglomeration economies, with economic growth and happiness following suit.

Not so fast, argue equally many learned scholars! Didn’t Vernon Henderson, another acclaimed urban economist, report in the Journal of Economic Growth that higher levels of urbanization are not necessarily associated with higher rates of economic growth. And, hasn’t Africa been urbanizing rapidly over the past 15 years without much poverty reduction?

As the world turns to ending extreme poverty and fostering shared prosperity, the impact of urbanization, and different urbanization patterns, on poverty and inequality, clearly requires more attention. Can urbanization, for example, occurgo too quickly, inducing poverty to urbanize, instead of to declininge?  Or can it be too concentrated geographically, generating faster growth (from larger agglomeration economies and economies of scale), but also higher inequality? Or is maximizing poverty reduction from urbanization simply a matter of smart urban management?

With urbanization patterns typically irreversible and global poverty a growing urban phenomenon, questions such as “Who benefits from urbanization?”, “When?” and “Under which circumstances?” are more pertinent than ever. Yet, to date, academic and policy debates on urbanization have most commonly used growth as the key yardstick for measuring progress.

In a first pass at addressing this vacuum, the Research Department and the Africa Region of the World Bank and the Institute for International Economic Policy of George Washington University are hosting an international conference on Urbanization and Poverty Reduction on Monday and Tuesday, 13-14 May in Washington, D.C. The conference can also be watched online. On Wednesday, the World Bank Infoshop will launch two books to discuss how to break the rural-urban divide.

Unusually,  for an urbanization conference, both rural and urban scholars are featured on the agenda - a deliberate attempt by the organizers to bridge both rural and urban perspectives. What to expect?  In addition to surveying current patterns of urbanization, several papers zoom in on the economic, sectoral and political forces giving shape to them. The African story promises to be especially thought provoking, with some presenters setting out to argue that Africa’s current urbanization is occurring at an historically unprecedented pace - driven not only by rural-urban migration at the usual rate of  2 per cent per year, but also by unusually high internal  population growth rates of 2-3 percent. Clearly, preserving and improving access to infrastructure and public services in the face of a population that doubles in size every 10 to 15 years poses challenges that would keep even the best of policy makers awake at night. How will such arguments resonate with the audience?

Another set of papers focuses on the challenges and welfare consequences of good urban land management.  Indeed, improved efficiency of urban land management can yield valuable gains. Yet this is extremely intricate due to multiple and overlapping land tenure systems and fierce competition for land in rapidly growing cities. In addition, when fortunes can be earned from converting agricultural into industrial and urban land, and these in turn then become a major source of funding for urban investment, the complexity only multiplies. Such processes underpin many social conflicts in present-day China, and are bound to become increasingly common also in Africa. Detailed case studies will provide a window on the staggering complexity of urban land management, and will assemble pointers for policy based on the latest evidence.

Several papers further examine how geographic concentration of the urbanization process (metropolitization versus secondary town development) may influence the pace of poverty reduction. There are some signs pointing to a metropolitan bias in urban development. While this may be good for more rapid agglomeration and thus more rapid growth, it may be less positive for poverty reduction and income growth among the bottom 40 percent. Furthermore, development of small towns and medium sized cities may be associated with more rapid rural non-farm diversification and rural poverty reduction.

The conference closes with a public debate, broadcast live. Three distinguished panelists, Vernon Henderson, Ravi Kanbur and Peter Hazell, whose scholarly expertise spans the urban-rural spectrum, kick it off with a discussion centered on “How best to galvanize the forces of urbanization for ending extreme poverty and fostering shared prosperity.” The exchange then continues Wednesday, with the dual book launch of “Financing Africa’s Cities” by Thierry Paulais and “Structural Transformation and Rural Change Revisited” by Bruno Losch, Sanddrine Fréguin-Gresh and Eric Thomas White.

Join the exchange at the World Bank or on-line to get to know some of the latest academic insights on the topic and to discuss how best to advance the urbanization and poverty reduction agenda moving forward. With more than 100 people already signed up, it may well turn out to be the first of a series of such conferences.