When thinking about poverty, the slums of the big cities in developing countries immediately come to mind. So it’s natural for people to think that urbanization causes or at lest exacerbates poverty. Many Third World governments try to stop urbanization and migration from rural areas to towns. But they are wrong.
Urbanization is of course on the rise. About half of the world’s population lives in cities: 3 billion, compared to 1.5 30 years ago.
However, the World Bank, in its latest World Development Report, states that cities in the Third World grow so fast because they create economic opportunities and possibilities. Wages of people in cities are much higher than the wages of their unskilled rural compatriots.
Cities are created by trade and industry. Factories cluster together and create cities because they profit from a concentration of skills and from the infrastructure (housing, transport, ports etc.) that cities offer. Consumers also profit from the presence of different traders and service providers in a relatively small space that is a city. And, finally, businesses that specializes in services for businesses – banks, insurance … – cluster where their customers are.
So slums may be a ghastly sight, but we shouldn’t forget that the country side is often in a much worse albeit not so visible predicament.
Here’s a related post on overpopulation.