The cost benefits of locating in cities are known as agglomeration economies. LDC governments have tended to pursue policies that favour urbanisation; this is known as the urban bias which further widens the rural-urban gap. Their intention is to achieve urbanisation economies and localisation economies. Through urbanisation economies governments are able to provide health, education and housing infrastructure in a more efficient way which avoids the high costs of supporting rural communities. Achieving localisation economies allows firms to benefit from clustering of firms and reduces material costs through more competition between suppliers, greater division of labour and lower transportation costs. It also enables clustering effects to take place.
The problem with urbanisation is that when the shift occurs in rural-urban migration significantly within a short period of time, we end up with over-urbanisation. Over-urbanisation causes economic, environmental and political problems. When the effects of the demographic transition occur too fast these problems are escalated. As governments are unable to support the urban population it hinders the LDC nation’s development prospects.
Whilst agglomeration can have positive effects on the economy, diseconomies of agglomeration can also occur as a result of over urbanisation. As more and more competition is introduced to a market and cities become crowded, the competition drives down pricing power, potentially making markets unsustainable. We can explain differences in population of cities within the same nation through two theories:
- Urban Hierarchical model
- Differentiated Plane model
The Urban Hierarchical model assumes that goods and services have different thresholds and ranges and those that qualify at the highest range will be located in big cities. The Differentiated Plane model specifies that firms will locate where transport costs are at a minimum. So cities with extensive transport links attract firms and therefore people. In developing countries, where transportation networks are often poor, migration pull tends to occur in one or two ‘mega cities’. This problem may evolve into urban gigantism problem. This can cause ‘first city bias’, whereby public funding is distributed disproportionally; the largest city receiving the largest share of private investment. This moves us onto the importance of urban planning.
Governments in LDCs need to have strong urban-planning in place to support to counteract mass migration. However, this has seldom been the case; cities have been unable to cater for the newly increased population and this acts as the catalyst to the ill effects of over-urbanisation. Mass production of housing needs to be met and when the market fails to fulfil demand, shanty towns and slums are constructed. These newly formed settlements lack clean water sanitation, electricity and sufficient sewage systems to cater for the population. Cairo’s sewage system is a notable example which has to cater for 10million people yet was original constructed to meet the requirements of a population of 2 million.(4) This inadequate sewage system inevitably leads to all kinds of health concerns which could have been prevented with more careful planning. Much of the developing world housing is ‘’illegal’’ due to inabilities to meet building codes. This miss-planning has greater consequences than would first appear. Because these dwellings are ‘illegal’’ they cannot be improved and miss out on government benefits and services.
Insufficient services provided to these slums results in pollution from households and factories. Due to the lack of electricity, factories are forced to use dirty fuels in production which cause air pollution and unhygienic conditions which further increase the risks of outbreaks of contagious diseases.
The agriculture sector is predominately based in the rural population. As farmers abandon their land in hope of better income in the city a vicious cycle can begin. The reduction in food supplies and the increase in food demand within the over populated shanty towns can lead to mass food shortages, which in turn drives famine induced migration. This impact of this issue can be reduced by governments offering subsidies as incentives to remain within the agriculture sector.
Another ill effect of rapid rural-urban migration is the high urban unemployment levels. There are cases where urban unemployment outstrips rural unemployment. LDCs tend to be abundant in excess labour with limited skills.(3) Underemployment in the rural sector is much more pervasive than in the urban sector. Rural-urban migration effects the structural composition of the labour market. The Todaro migration model attempts to explain the apparently paradoxical relationship of accelerated rural-urban migration in the context of rising urban unemployment. An important part of the theory of the model states that migration is caused by expected income, rather than actual income rural-urban real wage differential.(2) It also says principles of migration lie in rational economic considerations of relative benefits and costs.
The urban informal sector can be seen as an important escape from the poverty caused by rapid over urbanisation. In promotion of the urban informal sector, governments will be aiding growth in production in a low capital intensive environment, in a way that utilises excess labour. However, it must be managed carefully as it too can contribute to urban gigantism.
Rural-urbanisation migration can be beneficially to a LDC is managed correctly. It has been successful in some LDC countries but poorly managed by many. China has been significantly affected by these trends and has dealt with them well. China has overseen huge shifts to industrialisation over the last few decades and has extensive urban planning in place to meet the expected further increase in rural-urban migration in the future.
Problems arise with shifts in migration when levels accelerate too quickly without the correct economic infrastructure. Governments can limit the effects by using policies which create the right rural-urban balance or even deter population growth a as a whole; China’s one child policy being an extreme example. Governments can prepare for the formation of new settlements within cities, so that the negative externalities arising from the formation of shanty towns and slums can be avoided. Governments can also pursue investment in labour intensive industries, to avoid human capital going to waste and help development into industrialisation in the long-term. When they have achieved the right foundations to support mass rural-urbanisation they can facilitate the demographic shift, but until then LDCs should discourage it. At current levels they simply can sustain it to outbreak poverty.
- World Urbanisation Prospects: 2005 Revision, Department of Economic and Social Affairs, UN, 2005
- Todaro
- Cities, Poverty, and Development, Urbanisation in the Third World, A. Gilbert and J. Gugler
- Urbanization, unemployment and migration in Africa: Theory and Policy, M. Todaro, 1997
