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Urbanization and economic development in the third worldAn overview


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This study offers a broad overview of the urbanization dilemma in the Third World — within the context of elusive development — with particular attention to its current trends, components, consequences and policies to manage it.
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This study offers a broad overview of
the urbanization dilemma in the Third
World -‘within the context of elusive
development - with particular attention
to its current trends, components, con-
sequences and policies to manage it.
Keywords: Urbanization; Third World; Eco-
nomic development
The author is Fulbright Professor of Eco-
nomics and Public Policy in the Faculty of
Social Sciences and Visiting Associate
Fellow at the Institute of Social and Econo-
mic Research, University of the West
Indies, Mona Campus, Jamaica.
‘United Nations, Patterns of Urban and
Rural Population Growth, United Nations
Population Studies, New York, No 68,
1980, pp 33-34.
‘Kathleen Newland, City Limits: Emerging
Constraints on Urban Growth, Worldwatch
Institute, Washington, DC, Worldwatch
Paper 38, 1980, p 7.
Urbanization and
economic development
in the Third World
An overview
Kempe Ronald Hope
Urbanization is conventionally defined as the process of growth in the
urban proportion, rather than in the urban population per se. If
urbanization is defined as the growth of the urban proportion, then the
appropriate measure of the rate of urbanization is the difference
between the growth rates of the urban population and of the national
population. During the past two decades there has been a rapid
urbanization of much of the Third World. This has been due primarily
to development strategies that emphasized urban growth at the expense
of agricultural and rural development. As a result, the rate of increase in
the size of the non-agricultural population exceeds the rate of increase
in meaningful non-agricultural employment opportunities, thus leading
to what has now become known as ‘overurbanization’ in the Third
Current trends in
Current urbanization
rates in Third World cities are historically unique
in the sense that they have resulted in global concern. Today, a mere
1% shift of the world’s population from the rural to the urban areas
represents 44 million people.* Estimates made by the United Nations
suggest that during the period 198&2000 there will be a 1.4 billion
increase in population in urban centres worldwide of which 1.2 billion
will be in the Third World, as seen in Table 1.
By the year 2000, the majority of the world’s urban population (66%)
is projected to reside in the Third World. Between 1950 and 2000, it is
anticipated that the urban population of the Third World will grow by a
factor of 7.7, which translates into a factor of 10.9 in Africa; 6.9 in Latin
America; 7.2 in East Asia (excluding Japan); and 7.5 in South Asia. In
comparison, the urban population of the more developed regions is
expected to grow by a factor of only 2.4 during the same period. The
0264-2751/86/010041-17$03.00 0 1986 Butterworth & Co (Publishers) Ltd 41
Urbanization arzd economic development in the Third World
Source: United Nations, Patterns of Urban and
Rural Population Growth, United Nations
Population Studies, New York, No 68, 1980.
3United Nations, Patterns of Urban and
Rural Population Growth, op tit, Ref 1, p
Components of urbanization
The significant growth of the Third World’s urban population
direct result of two major factors: natural increase of the
population and rural-urban migration.
is the
4Bertrand Renaud, National Urbanization
Policy in Developing Countries, Oxford
University Press, New York, 1981, p 15.
‘Ibid. Natural population increase
“United Nations, Patterns of Urban and
Rural Populafion Growth, op cit. Ref 1, pp
The bulk of urban growth in the Third World is attributed to the natural
increase of urban populations. This is particularly the case in Latin
42 CITIES February 1986
Table 1. Total urban population and proportion of the population living in urban areas by major
areas and region, 1960-2000 (millions and %).
Region Component
World total
Total urban
% living in urban areas
Less developed regions
Total urban
% living in urban areas
Total urban
% living in urban areas
Latin America
Total urban
% living in urban areas
Total urban
% living in urban areas
East Asia
Total urban
% living in urban areas
South Asia
Total urban
% living in urban areas
Total urban
% living in urban areas
1960 1970 1980 1990 2000
1012.1 1354.4 1806.8 2422.3 3208.0
33.9 37.5 41.3 45.9 51 3
439.4 651.5 972.4 1453.1 2115.6
21.9 25.8 30.5 36.5 43.5
49.5 80.4 132.9 219.2 345.8
18.2 22.9 28.9 35.7 42.5
106.6 162.4 240.6 343.3 466.2
49.5 57.4 64.7 70.7 75.2
7.7 11.1 15.7 21.6 28.8
38.2 45.1 52.2 58.7 64.6
194.7 265.2 359.5 476.5 622.4
24.7 28.6 33.1 38.6 45.4
146.9 217.3 329.8 515.7 790.7
17.8 20.5 24.0 29.1 36.1
10.4 13.7 17.8 22.6 27.1
66.2 70.8 75.9 80.4 83.0
anticipated growth in the global urban population between 1950 and
2000 is expected to yield a distribution of 74% in the Third World, with
a breakdown of 13% in Africa, 16% in Latin America, 18% in East Asia
and 28% in South Asia.’
Urban growth rates of the Third World countries have been, and are
projected to continue to be, twice as high as the urban growth rate of the
more developed nations, and three times as high by the last decade of
the century. By 2000 the world’s urban population is projected to reach
about 3.3 billion, yielding a total world population increase of 80%
during the 197C2000 period, whilst the urban population is expected to
increase by about 145%.4 During the period 19.50-2000 the world
population is projected to grow by 160% and the urban population by
375% .s
Latin America and East Asia experienced the most rapid urban
growth in the 195Os, although they have now been overtaken by growth
rates in Africa. During the period 1975-80, urban areas in Africa were
estimated to have grown at an annual rate of 5.1%. South Asia also
experienced rising urban growth rates during the 1950-80 period,
increasing steadily from an annual average of 3.37% during the 1950-60
period to 4.33% between i975 and 1980.6
Urbanization and economic development in the Third World
American and South Asian countries. Thus, despite the much larger
pool of potential rural-urban migrants in the Third World, their rate of
urban in-migration differs very little from that of the more developed
countries. It is therefore fair to conclude that the causes of rapid urban
growth in the Third World are closely linked to the causes of rapid
natural increase.
In Table 2 we see the share of urban growth due to the natural
increase of the urban population. This table indicates that in half of the
countries the natural population increase was responsible for more than
50% of the urban growth. Conversely, in the remaining countries the
natural population increase accounted for less than 50% of the urban
growth. Demographers have shown that the cause of today’s rapid
urban population growth in those countries with large natural increases
of the urban population has been the post-war decline in mortality rates
which increased the gap between fertility and mortality.
The primary factors in the world-wide decline in mortality rates have
been well documented and are better understood than the factors in the
decline in fertility. The decrease in mortality was in large part the
unanticipated and unplanned by-product of social, technological,
economic and political changes. Thus, whereas it took the USA the
first half of this century to cut its death rate in half, it took Sri Lanka, for
example, less than a decade to do the same after the second world
Perhaps with the exception of Africa, the Third World has entered a
phase of demographic transition. After significant reductions in
mortality following the second world war, many Third World countries
are now experiencing a decline in fertility that might eventually lead to a
new state of fixed population.” However, since the developed world
reached replacement fertility in 1975 and its population is expected to
grow very little, almost all future population growth will be contributed
by the Third World. The size of the future population therefore depends
upon future changes in Third World fertility rates.
The key demographic factors that will bring about future natural
urban population growth in the Third World are three-fold. First, is the
expected and continuing drop in mortality levels which will in turn result
in a substantial increase in life expectancy. These will largely offset
fertility declines. The second factor is the very high proportion of
children and youth in the general population, particularly in Latin
America where 40% or more of the population is 15 years of age or
younger (in Mexico, for example, this proportion is 46%), whereas, in
the industrialized nations, the proportion is between 22 and 25% of the
population. Thus, when those in this age group in Latin America enter
their reproductive period of life, their sheer numbers will represent an
awesome potential for further large population increases, regardless of
the fact that the rate of increase may be diminishing. The third and final
factor is time itself. A lengthy period is needed for a population
structure to mature and attain a balance, which occurs when the death
rate has passed through its transition period (from high to low levels),
and the birth rate has done likewise. In time, the age structure will also
evolve to a point where a larger proportion of the population is adult.
Latin America, for example, finds itself near the mid-point in this
process, I” so that decades must elapse before that point is reached in the
Third World.
Table 2. Share of urban growth due to natural
population increase in selected Third World
nations, 1970-75 (%).
Papua New Guinea
Sri Lanka
Share of growth due
to natural increase
Source: Kathleen Newland, City Limits: Emerg-
ing Constraints on Urban Growth, Worldwatch
Institute, Washington, DC, 1980, p 10.
%nited Nations, The Determinants and
Consequences of Population Trends, Un-
ited Nations, New York, 1973, Chapter V.
‘Philip M. Hauser, ‘Introduction and over-
view’, in P. Hauser, ed, World Population
and Development, Syracuse University
Press, Syracuse, 1979, p 15.
‘See Jacques Loup, Can the Third World
Survive? Johns Hopkins University Press,
Baltimore, MD, 1983, pp 61-65.
“Inter-American Development Bank, Eco-
nomic and Social Progress in Latin Amer-
ica 7979, IDB, Washington, DC, 1979, p
CITIES February 1986
Urbanization and economic development in the Third World
Table 3. Percentage share of net migration in
urban growth in selected nations, 1970-75.
Papua New Guinea
Sri Lanka
Trinidad and Tobago
Costa Rica
Share of net
Sources: See Table 2; and Bertrand Renaud,
National Urbanization P o/icy in Developing
Countries, Oxford University Press, New York,
1981, pp 165166.
“Johannes F. Linn, Cities in the Develop-
ing World: Policies for their Equitable and
Efficient Growth, Oxford University Press,
New York, 1983, p 44.
“Michael P. Todaro, ‘Urbanization in de-
veloping nations: trends, prospects, and
policies’, Journal of Geography, Vol 79,
September/October 1980,-p i 6s.
13See. for example. Michael P. Todaro.
Intern& Migration’ in Developing Countries,
ILO, Geneva, 1976; Lorene Y.L. Yap, ‘The
attraction of cities: A review of the migra-
tion literature’, Journal of Development
Economics, Vol 4. Seotember 1977, DD
234-264, and Sally Findley, Planning kr
Internal Migration: A Review of Issues and
Policies in Developing Countries, US Gov-
ernment Printing Office, Washington, DC,
ISP-RD-4, 1977.
“‘Bryan Roberts, Cities of Peasants: The
Political Economy of Urbanization in the
Third World, Sige, Beverley Hills, CA,
1978, p 100.
‘%ally Findley, op tit, Ref 13, pp 13-14.
44 CITIES February 1986
Rural-urban migration
Migration is the other important determinant of urban population
growth. The usual focus is on the net migration from rural to urban
areas, but also of importance are the urban-to-urban migration flows
that take place in the Third World. The latter phenomenon is
particularly important from the perspective of the smaller towns and
intermediate-size cities that may be facing a net migration outflow.”
In Table 3 we see the share of net migration in urban growth in
selected countries. In sub-Saharan Africa, where most of the cities are
relatively small but growing very rapidly, migration from rural areas is
the primary influence on urban growth. However, even in those nations
where natural increase is the major source of urban growth, rural-urban
migration makes a heavy contribution as well. Urban migrants
contribute from one-third to one-half of the annual growth rate of Third
World cities. Because the vast majority of migrants are young adults in
the peak productive age groups whose fertility is higher than that of the
urban population as a whole, the long-term contribution of internal
migration to urban population growth is actually much greater.12
Basically, there are two models of the migration process. In the first,
migration is regarded as a purposeful and rational search for a better
place to live and work. In the second, migration is viewed as a response
to conditions which push the migrant into moving, perhaps without a
rational weighing of alternatives. The theoretical literature on migration
determinants is well publicized and need not be reviewed in detail
here.” However, it is important to discuss what the evidence from that
literature suggests.
The various theories have stimulated considerable empirical activity
and the results seem to be consistent. Although people migrate for a
variety of reasons, the empirical evidence suggests very clearly that the
primary factor determining migration is economic betterment. People
migrate from rural to urban areas in response to perceived differences in
economic opportunities between their original location and their final
destination. Migrants tend to move from low-to-high-income regions,
and* surveys have repeatedly found that economic factors are most
frequently cited as reasons for moving. These economic motives fall into
two general classes, the search for employment and the search for
higher incomes. Additionally, the expectation of better education
facilities for children is usually cited as a major reason for migration to
the urban areas.
In addition to the predominant economic factors there are also some
demographic factors that tend to influence migrant selectivity. Migrants
are relatively young and tend to be between the ages of 15 and 30. In
Latin America, migration is predominantly female while in Africa and
South Asia it appears to be predominantly male.14 Female migration to
cities in Latin America is encouraged by the multitude of jobs available
for women in domestic and other service activities. This age and sex
selectivity reflects the lifecycle factors influencing migration. At certain
stages in an individual’s life there is a high likelihood of changing
households and communities at the same time. Examples of such points
in the lifecycle are when youth first leave the parental home in search of
employment; upon marriage or divorce; and upon retirement.15
Another factor in migrant selectivity is that of education. Migrants
tend to be well educated and highly motivated relative to the population
at the point of origin. Individuals with formal education, especially at
16Johannes F. Linn, op cit. Ref 11, p 44.
17Carmen A. Miro and Joseoh E. Potter.
Population Policy: Researcki Priorities iA
the Developing World, St Martin’s Press,
New York, 1980, p 124.
“Michael P. Todaro, op tit, Ref 12, p 169.
lgLyn Squire, Employment Policv in De-
veliping .Countrie& 2 Survey if Issues
and Evidence, Oxford University Press,
New York, 1981, pp 6&69.
CITIES February 1986
Urbanization and economic development in the Third World
the secondary level or higher, can obtain good jobs in government or
commerce. These jobs are located in major urban centres and hence
aspiring employees must migrate to these cities. Thus, cities that receive
migrants are not, on balance, burdened with a flood of uneducated,
unskilled and unmotivated individuals and households, although there is
little doubt that rural-urban migration tends to keep urban wages at
levels below those that would prevail in the absence of migration.16
Rural-urban migration continues to be the dominant net migration
flow in nearly all Third World nations. Such migration presents both
obstacles and opportunities to Third World cities. About 3 billion
people live in the poor countries in Africa, Asia, and Latin America.
Almost two-thirds of this total live in non-Communist Third World
nations and, of these, 40-50% (800 million to 1 billion people) are the
truly poor. Of these people, 25-50% or more live in the slums, shanty
towns, and on the streets of cities such as Lima, Georgetown, Bombay
and Bogota, giving rise to what is now regarded as the ‘urban dilemma’.
Consequences of urbanization
Until a few years ago economists, sociologists and social planners alike
regarded urbanization as being positively associated with higher
productivity and industrialization. Proponents of the thesis that large
cities have a positive role in development had pointed to the advantages
that firms or businesses receive from access to larger markets for their
products as well as for labour and other inputs; the advantages that
urban residents enjoy in terms of access to better social services; and the
value of the more organized participation in the political process that
comes with increased urbanization.”
However, in contrast to this viewpoint, it is now persuasively clear
that there are negative effects and some costs associated with the
concentration of economic activity and population in the urban areas of
the Third World. The ‘overurbanization’ that results is associated with
widespread unemployment and underemployment in addition to all of
the problems of lack of housing and access to urban services, traffic
congestion, and environmental pollution.
The principal measurements of how well urban areas in Third World
countries have absorbed the rapid population growth are estimates of
urban unemployment and underemployment. One of the major
consequences of the rapid urbanization experienced by Third World
nations in the past two decades has been the increasing supply of urban
job seekers. In many countries the supply of job seekers far exceeds
demand, and this situation results in extremely high rates of unemploy-
ment and underemployment in the urban areas. When account is taken
of the underemployment rate, which exceeds 25% in Latin America,
Asia and Africa, then the overall figure for urban surplus labour well
exceeds 30% in many Third World nations.‘*
Recent research indicates that open unemployment in urban areas is a
more serious problem for 15-24-year olds than for the labour force as a
whole, for females than for males, and, at least up to a post-secondary
level of education, for the more educated than for the less educated.”
Some studies have shown that the migrant portion of the urban
population have lower rates of unemployment than the natives, possibly
because they accept jobs which natives will not take. Low unemploy-
ment rates among migrants may or may not lead to increased
Urbanization and economic development in the Third World
unemployment among natives. If the jobs are really ones that natives do
not take, native unemployment levels may be unaffected.20 This is an
important issue, since it brings into question the popular assumption
that migrants raise urban unemployment levels through either their own
unemployment or their taking jobs away from natives.
Despite the fact that average household incomes tend to be
systematically higher in urban than in rural areas and tend to be
positively associated with city size, underemployment and unemploy-
ment in the cities have a negative income impact on the family and often
contribute to its instability. Since the mother and other family members
leave home to work, this creates a situation in which children and young
people lose some adult supervision. Often the children themselves must
find work; and if they do, they also leave home at an early age, which in
turn makes for the disintegration of the family unit. One effect of
urbanization has been the abandonment of children as traditional value
systems erode. Employment and poverty in urban settings clearly have
different effects on family structures from those found in rural areas.2’
The rapid process of urbanization in the Third World has given rise to
concern regarding the costs it has incurred. Uncontrolled and un-
planned urban growth makes it difficult for cities to provide residents
with the services they desire, despite the current urban bias with respect
to development expenditures and strategies. Urbanization is decisive
because it is expensive. The difference between the costs of urban and
rural development relates to infrastructure. Urban housing, for exam-
ple, is much more expensive than rural housing. The proportion of
urban children for whom schooling is provided is always much higher
than in rural areas. Moreover, rural residents do more for themselves,
with their own resources, than urban residents.22
There are four common, but distinct, reasons for concern over the
costs of urbanization in the Third World:2’
(1) Fiscal. Urbanization places a heavy burden on governments as
they have to meet the rapidly rising demands for urban services.
(2) Financiaf. The high financial costs of urbanization are believed to
be' the prime cause of the heavy and growing international indebtedness
of Third World nations.
(3) Efficiency. The economic costs of urbanization (including conges-
tion and pollution costs) are taken to exceed those of rural growth; this
in turn is taken as a basis for judging urban development as excessive in
terms of economic efficiency.
(4) Equity. Rural households are thought to subsidize high urbaniza-
tion costs.
20Sally Findley, op tit, Fief 13, p 41.
*‘inter-American Development Bank, op
tit, Ref 10, p 138.
**W. Arthur Lewis. The Evolution of the
international Ecoknic Order, Princeton
University Press, Princeton, NJ, 1978, pp
‘%ee Johannes F. Linn, ‘The costs of
urbanization in developing countries’, Eco-
nomic Development and Cultural Change,
Vol 30, April 1982, pp 625648.
The conclusions on these four considerations as determined by Linn24
are as follows. First, it is impossible to derive an overall judgment about
how aggregate public service costs vary with settlement size. Despite the
fact that urbanization imposes a rapidly growing fiscal burden on Third
World governments, there is little reason to suspect that reducing the
urbanization process per se will reduce this burden unless it is
accompanied by reduced rates of industrialization or reduced popula-
tion and income growth. With respect to financial considerations, it was
found that rapid urbanization was not the primary cause of international
indebtedness of the Third World nations. There is no statistical
correlation between urbanization rates and debt ratios. In terms of
efficiency considerations, only costs were found not to influence the
46 CITIES February 1986
Urbanization and economic development in the Third World
optimum degree of urbanization or optimum size of cities. Benefits also
have to be taken into consideration. Moreover, many of the apparent
symptoms of urban inefficiency, in particular congestion and pollution,
are due to inappropriate policies within the city rather than the result or
inefficient city size or inefficiently high rates of urbanization. Finally,
with respect to equity considerations, it was found that rural dwellers do
not necessarily subsidize urbanization costs. Where this may be the
case, the cause was found to be inequitable public pricing and tax
Not withstanding the above conclusions, other evidence suggests that
the rapid growth of urban areas has far outpaced the ability of Third
world governments to provide adequate services.2’ There is evidence
that air pollution, noise levels, congestion, crime and health problems
tend to increase more than proportionately with the size of urban
centres.26 Urban living has increased both the quantity and the quality
of the economic needs and desires of the population. Such changes are
very important since they raise individual expectations and impose
added constraints on the economic policies of governments.
Pollution, congestion, lack of adequate services, and urban sprawl are
experienced by urban centres in both developed and Third World
nations. However, there is a fundamental difference based on the
degree to which such problems are felt. Urbanization in the Third
World has occurred at a much more rapid pace and most of its cities
have been unable to meet the growing demand for housing and urban
services. Such urban growth is expected to continue into the foreseeable
future, even if national policy biases favouring urbanization are
corrected. Consequently, the degree of efficiency with which Third
World nations allocate their resources will increasingly determine their
overall economic performance.
Policies to manage rapid urbanization
Third World governments have not succeeded in planning urban
growth, which has taken place more or less spontaneously. The solution
to this urbanization problem requires the adaptation of current Third
World urban growth to the limitations imposed by each country’s
available resources. This type of adaptation ought to result in an
‘appropriate’ city. Such appropriateness implies that the development of
urban strategy should be designed so as to cover the maximum number
of the existing population.
Despite the fact that it may be rather late to bring about major
changes in the larger cities, the inevitable urban growth that will be
affecting cities of all sizes in the next two or three decades means that
there will be repeated opportunities for doing better before irreversible
patterns are set. As such, appropriate national urbanization policies
must be given priority in the Third World and must include four major
objectives: the full development of the national resources of the
country; the maintenance of national cohesion among various regions,
particularly in the case of very large disparities in per capita output
among regions; the prevention or correction of excessive concentration
of economic activities within the urban regions; and more efficient and
equitable growth management within cities.27
National urbanization policies will be influenced by the prevailing
economic, social, political and cultural characteristics which will differ
widely from country to country. These differences imply dissimilar
25Michael P. Todaro, City Bias and Rural
Neglect: The Dilemma of Urban Develop-
ment, Population Council, New York,
1981, p 27.
*%ee, for example, Irving Hoch, ‘Urban
scale and environmental quality’, in R.G.
Ridker, ed, Resources and Environmental
lmplicabons of United States Population
Growth, Johns Hopkins University Press,
Baltimore, 1973; and Inter-American De-
velopment Bank, op tit, Ref 10, p 135.
*7See Bertrand Renaud, op tit, Ref 4, p 7.
CITIES February 1986
Urbanizalion and economic development in the Third World
*‘Harry W. Richardson, ‘National urban
development strategies in developing
countries’, Urban Studies, Vol 18, October
1981, p 272.
29Michael P. Todaro, op cit. Ref 12, p 173.
urbanization policies. For example, the strategy to combat a high
primacy pattern such as in Thailand would be inappropriate for a
country with a more balanced spatial structure such as Nigeria or
Malaysia. Also, policies would vary between regions with high levels of
urbanization such as Africa and most of Asia. In general, the lower the
current level of urbanization the greater the scope for a national
urbanization policy with regard to flexibility in changing size and spatial
distribution of urban regions.28
Future national urbanization policies must include elements that
reduce urban unemployment and narrow the rural-urban wage gap,
increase the relative disposition of public services in the urban centre,
foster integrated rural development and improve administrative respon-
Urban job creation and the elimination of urban wage biases
The primary cause of urban poverty in the Third World is the severely
limited income earned by the poor through gainful employment.
Policies designed to increase the employment and wages of the urban
poor must therefore be given foremost attention. The basic issue to be
dealt with is therefore how the urban labour supply can be absorbed on
decent wages without further increasing the urban-rural wage differen-
Perhaps the most powerful stimulus to job creation, and hence labour
demand, is economic growth. Economic growth leads to rapid labour
absorption throughout the economy in both urban and rural areas.
Conversely, when an economy stagnates, as is currently the case in both
the Third World and developed nations, unemployment is a much more
pressing problem. Policies aimed at improving the economic growth of a
nation are therefore very important elements of any employment
strategy. However, such macroeconomic policies alone cannot eliminate
the general employment problem in the Third World. Clearly, there will
need to be supplementary policies that bring about the growth of the
manufacturing, service and government activities sectors. Policies
designed to generate a rapid and sustainable growth in these sectors will
therefore also lead to a rapid growth in the demand for urban labour.
With respect to urban wage biases, wage rates have consistently been
higher in the urban areas. Wage rates in rural areas are usually thought
to be determined either by subsistence or nutritional requirements, or
by the forces of supply and demand, the latter explanation involving
competition, dualism and monopsony. Efforts to narrow the rural-
urban wage gap usually involve incomes policies to keep urban wage
rates from rising and price supports for agricultural products to raise
rural incomes, as in Kenya. Some nations, such as Singapore, have also
exercised wage restraint by curtailing the power of the trade unions.
Since 1953 India has sought to moderate wage demands through labour
courts, wage boards and industrial tribunals. Other countries, such as
Tanzania, have used public sector wage scales. But perhaps what is
needed is a freeze on urban real wage rates, particularly in the public
sector, either through a modification of civil service salary scales or by
allowing urban prices and taxes to accelerate disproportionately to rural
prices and taxes.29 Unless such concrete efforts are made to moderate
the rural-urban wage differential then migration from the rural to the
urban areas will continue to be a rational decision for achieving
economic betterment.
CITIES February 1986
Urbanization and economic development in the Third World
Improving urban public services
Rapid urbanization in the Third World has made it difficult for
governments to provide, in a timely and efficient manner, all of the
public services required by urban residents. This combination of urban
congestion and inadequate services generates health, education, trans-
portation and housing problems.
Education and health policy. Government involvement in the provision
of social services, such as education and health, has been a long-
standing practice in the Third World. On average, urban households are
more educated, healthier and better served by education and health
facilities than their rural counterparts. However, the urban poor usually
have limited access to the better health care centres and schools in the
urban areas due to the prohibitive costs. To combat this situation a
number of countries, notably in the Caribbean, have implemented
systems of universal education and health care to ensure access for
everyone, regardless of income level or social status. These countries
must be commended and such a universalized system of education and
health care ought to be attempted in other Third World nations as an
effort toward meeting basic human needs in those nations.
Every individual is born with a collection of abilities and talents and
education, in its many forms, helps people to realise their full potential.
The widespread provision of basic preventive and curative medical
services is essential to the life expectancy of all individuals.
Recognition of the link between education and development has led
to public expenditures on education becoming very important in many
nations when measured in relation to GNP. In a number of Third World
nations, education has absorbed more than a quarter of all public
expenditure, and education is increasingly being placed in the overall
context of development objectives as one of the many important policy
instruments to alleviate the rapid urbanization problem.
Three separate but interrelated perspectives illustrate the significance
of education to development.30 First, it is a basic human need. It
provides people with fundamental knowledge, skills, values and
attitudes while enhancing their capacity to change and their willingness
to accept new ideas. In the Third World, education is becoming
increasingly necessary for survival. It assists people to understand and
benefit from change and to persevere in attaining their economic rights.
Second, education is seen as a means of meeting other basic needs,
mainly because it provides the necessary knowledge for a change in
current practices and skills and better use of the services provided.
Increased productivity and greater longevity arising directly as a result
of education raise the demand for better housing, more food, cleaner
water, and greater education and health facilities, while also enabling
society to satisfy such needs. The relationship is reciprocal. Third,
education also plays a critical role in development by providing
individuals with the ability to change their culture and seek constructive
roles in society.
Improving health in the Third World requires efforts far beyond
medical care. It is closely linked with food and nutrition, with
emnlovment and income distribution. and with the international
%ee Abdun Noor, Education and Basic I ,
Human Needs, World Bank, Washington, economy. The determinants of health have long been well known: first,
DC, World Bank Staff Working Paper No is people’s purchasing power for certain goods and services, including
450, 1981, pp 2-4. food, housing, fuel, soap, water and medical services; second, is the
CITIES February 1986 49
Urbanization and economic developmenr in the Third World
3’World Bank, World Development Report
1980, Washington, DC, 1980, p 53.
32D.C. Rao, ‘Urban target groups’, in H.
Chenery et al, eds, Redistribution With
Growth, Oxford University Press, New
York, 1974, pp 14%150.
34World Bank, World Development Report
1979, Washington, DC, 1979, p 84.
351bid, p 79.
health environment including climate, standards of public sanitation and
the prevalence of communicable diseases; third, is people’s understand-
ing of nutrition, health and hygiene.j’
The 1970s have witnessed the evolution of a much broader approach
to health policy, including attempts to implement universal low-cost
basic health care. However, primary and preventive health care is still
not a nationwide reality in most Third World countries where public
health expenditures are heavily biased in favour of curative care, and
within this category the emphasis is on in-hospital rather than
out-patient care, despite the prevalence of diseases whose incidence
could be greatly reduced by preventive measures. The proportion of
public health expenditures on preventive health care is rarely above
20% although there is considerable variation among countries.32 The
diversion of public resources to hospitals that provide high quality care
for relatively few people rather than provision of environmental
sanitation and mass immunization is a costly social waste at the expense
of the poor. There is a long list of diseases to which the poor are
particularly susceptible which could be prevented by improved provi-
sion of environmental sanitation projects, piped water and insectides.
Health policy in the Third World should therefore reverse existing
priorities and there is, indeed, some indication that this is beginning to
take place. In Indonesia and the Philippines, for example, recent health
care projects have emphasized comprehensive preventive care. Howev-
er, the framework of the basic health care system in Jamaica provides
the best example for Third World nations of a comprehensive primary
health care system. The system operates out of community-based health
centres in locations easily accessible to the poor. It relies primarily on
out-patient treatment and emphasizes preventive health care and
education (slanted toward the needs of such vulnerable groups as
pregnant mothers, infants and children), improved sanitation, maternal
and infant care, immunization, family planning and nutrition pro-
grammes. It is supported by a relatively inexpensive but effective
paramedical staff.3”
Transportation policy. Transportation is typically a means to other ends,
with regard to both passengers and freight. It plays a central role in the
development of urban areas as the essential link between residence and
employment, and between producers and users of goods and services.
Traffic congestion inevitably occurs as urban areas grow, due to the
inability of transport facilities to expand to maintain mobility, partly
because of resource limitations and partly because urban transport
demand is not curtailed by pricing or regulation. The private automobile
takes roughly nine times more road space per passenger than a bus. The
explosive increase in automobiles in urban areas of the Third World, at
rates two to five times those of urban populations, therefore exerts
tremendous demands on the existing urban road space and is a major
cause’of severe congestion and pollution problems, especially in the
cities of the middle income countries,3” such as Port-of-Spain in
Trinidad and Tobago.
The poor are most seriously affected by the transportation dilemma,
both in terms of cost and also their dependence on transportation for
access to employment and services. Any disruptions in the transporta-
tion service will create severe hardships for this already hard pressed
CITIES February 1986
Urbanization and economic development in the Third World
Past transportation policies in the Thrid World have been, and
continue to be in some countries, oriented toward private automobile
traffic, primarily in. the urban centres. This resulted in massive
expenditures on urban roads, neglecting strategies to develop bus and
train facilities and access roads for low-income neighbourhoods.
Considerable scope therefore exists for revising current transportation
policies and replacing them with policies that would, infer afia, control
private automobile operation and ownership; emphasize mass transit
facilities; help conserve energy and foreign exchange; increase employ-
ment; improve access for the poor; impose user fee charges for cost
recovery of public transportation investments; encourage private service
provision and/or denationalize mass transit facilities; and enforce
national regulations that would maintain order and accountability.
Housing policy. The need for housing is fundamental, but many Third
World nations have not been able to give it priority. It has been
estimated that in principal cities in 40 Third World countries more than
half of the population live in slums and uncontrolled settlements in 17
cities, and only twelve of the cities had less than a third of the
population living in these conditions.“’ The high concentration and
visibility of deficiencies in urban housing makes this one of the most
urgent problems facing Third World nations in their transition from
rural to urban societies, with the ultimate result being a shortage of
adequate housing which leads to overcrowding, squatter settlements
and steeply climbing house prices.
Many Third World nations have developed public housing pro-
grammes. Most of these efforts have failed because they were poorly
located, built or designed, and often too costly for the poor.
Additionally, there can be no serious housing policy for the poor
without a bold land policy and such a land policy faces grave political
obstacles. Often, construction of public housing has been combined
with slum clearance programmes which are usually regarded as the
solution to the social by-products of slum dwellings. Yet, in most cases
slum clearance has been of little help, and even detrimental to efforts to
provide housing.
Several countries have constructed residential estates located some
distance from the urban centres. These housing estates serve to
decongest the city and take advantage of lower land prices. Yet, housing
estates suffer from many of the ills of public housing, namely poor
transportation links, inappropriate design and high rents.” Other
countries have attempted to cope with housing shortages by promoting
self-help or cooperative schemes, as was the case in Guyana, for
example, during the 1970s. However, this option is not without its
problems. This type of scheme is dependent on mutual cooperation and
the participatory process which cannot be guaranteed for the duration of
construction. Moreover, there is also considerable dependence on the
government for permits, licences and foreign exchange releases to
acquire materials, all of which are subject to bureaucratic discretion and
tend to be under the control of corrupt officials who have to be bribed.
36D.C. Rao, op tit, Ref 32, p 151.
37John F. Turner, ‘Uncontrolled urban de- Housing policy in the Third World undoubtedly requires government
velopment: Problems and policies’, inter- intervention so that large numbers of the poor can benefit. The policy
national Social Development Review, No must contain elements that eliminate obstacles to private construction
1, 1966, pp 123-124. efforts, which result in improvements in the availability of housing
CITIES February 1986 51
Urbanization and economic development in the Third World
finance, encourage the upgrading of slums, and regulate the acquisition
of land so that competition and equal opportunity are maintained.
38Julius K. Nyerere, On Rural Develop-
ment, Address to the Food and Agriculture
Organization World Conference on Agra-
rian Reform and Rural Development,
Rome, Italy, 13 July 1979, pp 3-4.
3gP. Coombs and M. Ahmed, Attacking
Rural Poverty: How Non-formal Education
Can Help, Johns Hopkins University
Press, Baltimore, 1974, pp 13-14.
Developing the rural sector
The bulk of the poor in the Third World live in rural areas. However,
urban property is more obvious - the slums and degradation of some
Third World cities bring themselves to the attention of the richest
citizens and casual visitors from other areas. However, the majority of
slum dwellers and squatters on the streets have migrated to towns
because they are forced from rural areas by landlessness, joblessness
and hopelessness. It is therefore in the rural areas that the long-term
problems of urban poverty can most effectively be tackled. Trying to
confront mass poverty by solely improving conditions and providing
work in the urban centres simply attracts more and more people from
the depressed rural areas.3s
The development of the rural sector is therefore essential, not only in
terms of local improvement but also as a part of the overall national
economic policy. Rural development is taken here to mean the
far-reaching transformation of social and economic institutions, struc-
tures, relationships and processes in any rural area. It conceives the
cardinal aim of rural development not simply as agricultural and
economic growth, but as balanced social and economic development,
including: the generation of new employment; the equitable distribution
of income; widespread improvement in health, nutrition, and housing;
greatly broadened opportunities for all individuals to realize their full
potential through education and a strong voice for all the rural people in
shaping the decisions and actions that affect their lives.39
For rural development to be successful it must be integrative in
nature. Integrated rural development, as a concept, was first introduced
by the donor agencies in the 1960s. It referred to particular types of
projects designed to meet the requirements of simultaneous and
comprehensive action in such areas as water, power, extension, credit,
roads and storage. The idea was that the various complementary
activities of rural development required a single administrative
framework rather than being implemented by a variety of separate
agencies. The success of such projects in raising productivity and
incomes in particular areas helped to popularize the slogan of integrated
rural development which became the subject of a number of interna-
tional conferences and seminars in the 1960s and 1970s.
The essential thrust of rural development is action to raise the level of
living of the rural poor. Specific means for doing so encompass a wide
range of approaches, which, if they are to be successful, must be
adapted to the existing country situation, must be realistic in terms of
implementation, and must be supported by the policy makers. In
attempting to achieve all of these goals, particular attention must be
given to all aspects of the population situation since it is only through
balances and coordinated efforts to increase production and services
and control population growth that significant improvement in living
standards can be achieved in the Third World. Such integrated
development is particularly important since much of the unemployed
and underemployed rural labour force, together with substantial new
additions to the labour force, must be retained in rural areas if the
problems of the urban areas are not to be exacerbated by uncontrolled
CITIES February 1986
Urbanization and economic development in the Third World
Rural development strategies focus particularly, but not exclusively,
on the agricultural sector as agricultural work is the major economic
activity in rural areas of the Third World. Debates over development
strategy have often swirled around the relative importance to be
assigned to agriculture versus industry. The historical evidence suggests
that this dichotomy is frequently overstated. Specifically, the notion that
rapid industrialization entails a total neglect of agriculture is erroneous;
it underestimates the importance of the mutually beneficial links
between agricultural and industrial development and, indeed, in most
Third World nations successful industrialization has been supported by
sustained and broadly-based agricultural growth. The major issues in
agricultural development in Third World nations are how to sustain a
rate of growth that allows for a balanced expansion of all parts of the
economy; and how to ensure that the pattern of agricultural growth is
such as to make a strong and direct impact on rural poverty, and,
indirectly, on a reduction in migration of the poor to urban areas. In the
struggle towards industrialization it has been relatively easy to overlook
the importance of the agricultural sector in development and to neglect
the necessary harmony between policies to encourge the growth of
industry and the improved performance of agriculture. However,
despite the recent rapid growth of industry and increasing urbanization,
the agricultural sector still looms large in the Third World since it is the
sector which provides employment for a large section of the labour
force, accounts for the majority of poor people, and is the birthplace of
many of the urban poor.40
A rural development strategy may enter into the planning process at
some or all of the following levels; the aggregate level, the sectoral
level, the project level and at the level of special measures loosely linked
with the main structure of the plan. The majority of Third World
nations have acquired a great deal of experience in formulating
development plans and, as such, the inclusion of a rural development
strategy in these plans should pose no major problem. Realization of the
objectives of a broad based integrated rural development strategy,
however, hinges on national commitment and on the translation of that
commitment into three areas of action. First, there must be the
necessary policy changes, including more equitable distribution of land
rights and incentive pricing for crops produced by subsistence farmers,
in particular for food crops. Second, resources must be allocated on a
priority basis to increase the productivity of the subsistence rural sector
and to develop agricultural technology, effective extension, and
transportation networks. Third, an adequate effort must be geared to
developing institutional capability, not only in the organized public
sector but also in the rural agricultural sector, to make maximum use of
the existing resources and thus ensure effective implementation of the
policies and plans directed at the unemployed.
Fundamental to any process of planned rural development is the
active and willing participation of rural peoples in the development of
4aKempe Ronald Hope, ‘Agriculture and the area in which they reside.41 Such participation requires that these
economic development in the Caribbean’,
Food Policy, Vol 6, No 4, November 1981, people not only share in the distribution of the benefits of development,
D 253. be they the material benefits of increased output or other benefits
I- -~~
4’See David J. King, Land Reform and
Participation of the Rural Poor in the considered enhancing to the quality of life, but that they also share in
Development Process in African Coun- the task of creating these benefits. Participation may be regarded as a
tries, World Bank Conference Papers on substitute for political mobilization. It is, in that sense, the antithesis of
Land Reform, Washington, DC, 1973. politicization as it provides political legitimization for institutional
CITIES February 1986
Urbanization and economic development in the Third World
%harles Harvey et al, Rural Employment
and Administration in the Third World:
Development Methods and ANernative
Strategies, ILO/Saxon House, Geneva,
1979, pp 23-25.
43See Doreen Warriner, Land Reform in
Principle and Practice, Clarendon Press,
London, 1969.
44Folke Dovring, Economic Results of
Land Reform, US Agency for International
Development, Washinqton, DC, June
1970, 6 23.
45World Bank, World Development Repot?
198.2, Oxford University Press, New York,
1982, p 84.
programmes without significant conflict.42 This then serves to enhance
the viability and success of the programme or programmes.
Lund Reform. Land reform is one of the most relevant institutional
factors in agricultural and rural development. It can be regarded as a
systematic, policy-directed change in the terms under which the
agricultural population holds and uses land. The objectives are,
generally, to improve the farming population’s economic performance
as well as its economic and social position. Essentially, land reform
seeks to redistribute rights in land for the benefit of small farmers and
agricultural labourers.“” Since land reform, in the sense of redistribution
of land, involves a conflict of interest between ‘haves’ and ‘have-nets’, it
is also a political question. In fact, the immediate issues are more
political than economic. Guyana’s nationalization of the country’s sugar
estates is a prime example.
The benefits of any vigorous land reform programme are plentiful.
First, the transfer of land from large properties into small ownership can
be expectd to lead to an increase in agricultural production, as a result
of higher inputs of labour owing to its higher marginal productivity. An
essential reason for the continued success of agricultural development
after land reform is, as generally recognized, in the production incentive
it gives small-scale own-account workers. Also, when production
increases in the wake of land reform, more of it is likely to stay in the
rural area as farmers’ incomes. The whole incentive theory of land
reform as a factor causing production to increase assumes that this
happens, and so the agricultural population ought to become better off.
At least in the short run, this should also mean better off in relation to
the people in other sectors. This characteristic is one that leads to
increased distributive equity in agriculture which may carry over into
other sectors, and could conceivably be one of the more important, and
as yet overlooked, aspects of land reform.“”
Given this normal level of expectation, pertaining to incomes and
production, reform can be considered compatible with development,
though the change in structure itself is not likely to generate a higher
rate of growth. In the Third World, it is necessary that attempts be made
to derive some of these advantages. Essentially, land reform provides
the landless rural classes and small owners with new opportunities to
better their lot. Higher incomes will result in their being able to have
more food, better housing and clothing, and a greater chance to educate
themselves and remove themselves from the poverty rolls. The
experience in countries that have undertaken land reform is encourag-
ing in this respect. For example, in Mexico, China, the Republic of
Korea and Japan such programmes have substantially improved the
rural income distribution, farmers’ equity and security and the base for
subsequent agricultural progress.4”
Prolix investment. A programme of public investment, and particularly
of labour-intensive rural public works, is an essential component of a
strategy to develop the rural sector. However, in countries where the
distribution of the ownership of land is highly skewed, land reform
makes it much easier to devise opportunities for productive investments
in which benefits accrue mainly to the poor, that is, in which the
leakages are relatively small. Without land reform, leakages are likely
to be large for most forms of public investment.
CITIES February 1986
Urbanization and economic development in Ihe Third World
In any case, it is likely to be both desirable and feasible for
governments to undertake labour-intensive rural public works pro-
grammes for the two-fold purpose of providing supplementary income-
earning opportunities for the most disadvantaged rural families and
improving the rural infrastructure through the building of roads and
similar activities.46 Rural public investment is important precisely
because it can be organized at the community level. Additionally, such
investment revitalizes the rural lifestyle and creates a social and physical
infrastructure which allows rural residents to share broadly in a nation’s
development benefits and remove them from the drudgery, isolation
and poor quality of life which has so often acted as a partial catalyst for
migration to the urban centres. Examples of successful rural public
works programmes are the Inpres programme in Indonesia and
Morocco’s Promotion Nationale.
Participation of the rural poor. President Julius Nyerere of Tanzania has
argued that:
If the people are to be able to develop they must have power. They must be able
to control their own activities within the framework of their village communi-
ties. The people must participate not just in the physical labour involved in
economic development but also in the planning of it and the determination of
Projects of genuine social and economic value are most likely to be
identified, planned and built if rural people are able to play a decisive
role in choosing them. One author has argued that optimum participa-
tion must be included among development’s strategic principles because
unless efforts are made to widen participation, development will
interfere with man’s quest for esteem and freedom from manipulation.4”
That higher levels of participation of the poor should, and do,
generally have positive effects on socioeconomic equality in the Third
World is a foregone conclusion. More generally, widespread participa-
tion means more widespread access to power, and those who gain access
to such power will insist that there be actions to broaden their share in
the economic benefits of society. In Jamaica, for example, participation
of the poor in rural development is closely tied to the benefits that
members derive from it. 4y In China, where the Socialist Revolution was
based on large-scale participation of the peasants in a revolutionary
46Bruce F. Johnston and William C. Clark, struggle, economic cooperation in agriculture and side-line production
Redesigning Rural Development: A were combined with the lowest level of government administration and
Strateaic PersDective. Johns Hookins Uni- the principles of collective ownership of land and collective land use,
versity Press, ‘Baltimore, 1982, d 256. and considerablv strengthened the autonomous Dower of these local
47Juli& K. Nyerere, op tit, Ref 38, p 8. . 1
48Denis Goulet, The Cruel Choice, units of rural administration.5”
Atheneum, New York, 1971, p 148. Additionally, there are large and growing numbers of peasant and
4gArthur A. Goldsmith and Harvey S. Blus-
tain, Local Organization and Participation community organizations in countries such as Haiti, Paraguay and Peru
in Integrated Rural Development, Rural through which the rural poor are striving to improve their situation.
Development Committee, Cornel Universi- Their endurance in the face of great odds suggests the importance of the
ty, Ithaca, NY, 1980, pp 88-89.
SoWilliam F. Wertheim and Matthias participatory process to both the peasants themselves and their
Stiefel, Production Equality and Participa- communities.5’
tion in Rural China. UNRISD Particioation But despite the advocacy of the participatory process in the
Programme, Geneva, 1982, pp 83-85. develoDment literature, and not withstanding its successful imolementa-
“Peter Hakim, ‘Lessons frc% grass-root I L
development experience in Latin America tion in some countries, a number of obstacles to participation of the
and the Caribbean’, Assignment Children, poor in the rural development process in the Third World still exist. The
Vol 59160, No 2, 1982, p 138. obstacles faced are varied and are found within the implementing
CITIES February 1986
Urbanization and economic development in the Third World
agencies, the rural communities themselves, and also within the broader
institutions of society. 52 Within the implementing agencies, the primary
problem is their centralized nature which does not lend itself to the
participation of others in decision making. Moreover, these agencies
tend to be located some distance away in national or regional capitals
where they are out of touch with the rural communities they are
intended to serve. In such communities, the major problems are a lack
of appropriate local organization and corruption on the part of the more
powerful community individuals who take personal advantage of any
latitude for influence available, thus corrupting the purpose of the
participatory approach and destroying the spirit of cooperative effort.
Within broader society, the basic problem is that participation is
generally pursued as a means of reaching the poorer elements of a
society to increase their welfare. However, this involves a societal
change process which tends to conflict with the status quo.‘”
It follows, therefore, that for the participatory process to be effective
both political and economic power must be held by the people within
their communities. The rural residents are in the best position to choose
in which organizations they will participate. Experience shows that
effective participation cannot be commanded by policy makers but must
instead be induced through the advocacy of projects that offer sufficient
incentives to attract the persona1 resources of time, energy, and the
freedom of action, away from other urgent and competing tasks, of the
52See Frances F. Korten, ‘Community
participation: A management perspective
on obstacles and ‘options’ in David C.
Korten and Felipe B. Alfonso, eds,
Bureaucracy and the Poor: Closing the
Gap, Kumarian Press, West Hartford, CT,
1983. DD 181-200.
Improving administrative responsiveness
Institutional management in the Third World has historically been very
poor, despite the fact that institutional constraints are as serious a
barrier to development as a shortage of development finance. The
54This idea and most of this section is administrative machinery of Third World nations is generally located in
derived from Kempe Ronald Hope, ‘De- the urban areas in isolation from