The Role of Urbanization in Economic Development

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The Role of Urbanization in Economic Development

• Insights from the Growth Report

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The Growth Report

• Strategies for Sustained Growth and Inclusive
  Development
• Report of the Commission on Growth and
  Development
• Views of 19 leaders and 2 academics
• Report is about sustained high growth its
  causes, consequences and internal dynamics

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The 13 Success Stories

• Since 1950, thirteen economies have grown at
• an average rate of 7 percent a year or more
• for 25 years or longer. At that pace
• of expansion, an economy almost doubles
• in size every decade.

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Policy Ingredients of Growth Strategies

• High levels of investment
• Technology transfer
• Competition and structural change
• Labor markets
• Export Promotion and Industrial Policy
• Exchange Rates
• Capital Flows and Financial Market Openness
• Macroeconomic Stability

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Policy Ingredients (cont)

• Savings
• Financial Sector Development
• Urbanization
• Equity and Equality of Opportunity
• Regional Development
• The Environment and Energy Use
• Effective Government
• The Quality of Debate

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Urbanization

• This year, the world will pass an
• important threshold half the worlds
• people will live in cities. Over the next
• two decades, as the global
• population increases, most of that
• growth will take place in cities
• in developing countries.

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Growth and Urbanization

• No country has industrialized without also
  urbanizing
• Cities thrive because of agglomeration economies
• Labor and capital move across sectors and
  geographically
• Migration to the cities is part of transformation
  related to rapid growth

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Urbanization managing chaos

• In no country has the urbanization process been
  entirely smooth easy to conclude that
  urbanization is an unpleasant side effect
• Proper response is not to resist urbanization but
  to make it more orderly
• Key challenges
• Financing urban infrastructure
• Defining property rights
• Housing

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The role of Agriculture

• Urbanization is not an argument for ignoring
  investments in agriculture
• Agriculture investments should be justified on
  their own merits
• Rural investment unlikely to slow growth of
  cities

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Implications for Uganda

• Key characteristics Landlocked, Rural Economy,
  High Labor Growth
• CEM conclusion Transformation needed
• Farm to off-farm production
• Domestic to export markets
• Rural to Urban
• Implications Prioritize infrastructure
  investments and plan for urbanization