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close this bookPopulation, Urbanization and Quality of Life (HABITAT, 1994, 47 p.)
View the document(introduction...)
Open this folder and view contentsForeword
View the documentIntroduction
View the documentI. Urbanization: conceptual and measurement issues, temporal and spatial perspectives and the driving forces
View the documentII. Impact of urbanization on social change and modernization
View the documentIII. Impact of urbanization on demographic changes
View the documentIV. Impact of urbanization on individual and household income
View the documentV. The challenge: more efficient and effective urban management
View the documentVl. Conclusion
View the documentReferences
View the documentAnnex

IV. Impact of urbanization on individual and household income

Urbanization has impacts, not only on individual, but also on household income, as is broadly reflected and manifested in the following facets of relationships and processes.

A. Relationship between urbanization and economic development

There are two contrasting schools of thought regarding the relationship between urbanization and economic development. Generally, urbanization is a function of various ingredients of economic, social and political development processes spurred by a relatively resilient monetary economy, a shift from agricultural to nonagricultural employment, including that in industrial enterprises and services, the spread of social amenities and drastic changes in socio-cultural systems which have transformed urban environments (United Nations, 1969). Historically, urbanization has been found to be positively related to economic development in the developed countries (Lampard, 1955), and considered an integral part of economic transformation which can be guided into a socially desirable pattern (Jones, 1972). Apart from their political and intellectual functions, cities have a predominant economic function. They are centres in which new forms of economic activity and new types of economic organization are evolved. They are places, not merely in which new commodities were traded and where new markets and sources of supply were explored and conquered but in which appeared the first signs of new class relations based on alterations in the social division of labour (Hoselitz, 1969: 239). In developing countries, cities play a catalytic role in their national economic growth and development (Hoselitz, 1953). This explains why in the Philippines, urbanization was at one time considered an asset which should be managed rather than stopped (Dotson and Teune, 1972). This fact is more widely accepted today. Indeed, economic activities tend to concentrate in the urban centres, where today 60 per cent of gross national product is generated by about one third of the total population. Indeed, some regional planning and development analysts have advocated a policy of "deliberate" and accelerated urbanization in order to enhance development, as cities in the developing world do play an important role in political and economic development (Friedman, 1968).

Urbanization has traditionally been linked with industrialization. At least this was the experience of the Western world, the former socialist-bloc countries of Europe, Japan and the NICs as well as the ASEAN member countries. Yet it should not be assumed that both processes necessarily accompany each other, as in many circumstances urbanization has been a precursor of industrialization, preparing infrastructure and other factors of production for the latter to be realised. Even in less industrialized countries where agriculture predominates, the interdependence between urban and rural areas, as of their residents, sustains the exchange of commodities, thereby supporting urbanization, while at the same time fostering rural development (Breese, 1978).

Examples abound of the following roles of urban areas in what in the 1970s were newly emergent nations (Breese, 1978):

(a) Urban centres constitute the points of contact with the outside world. This is particularly true of capital cities which not only dominate the national scene, but also organize linkages with other cities of contiguous countries or with which they have evolved economic and other links. Air transport and communication networks throughout the world have thrived on this fact, as have diplomatic and international trade exchanges between countries.

(b) Cities are the loci of political and economic power. To these may be added the social and demographic centres at which these aspects peak within a national framework. Christaller's central place theory, modified in many countries as "growth centres", "service centres" or "trade and production centres", depicts an urban hierarchical framework whereby cities, or identified localities, form a web of linkages across various echelons in the hierarchy. The easiest way to appreciate this is to look at political and economic maps of countries which, among other things, show urban areas of different sizes and orders, implying their roles as political and economic foci at different levels.

(c) Urban areas are agents and points of diffusion of social change, especially in their immediate hinterlands. New ideas which eventually embody national policy and new leaders often emerge in cities before they diffuse elsewhere in the national framework. Even bureaucratic tendencies evolving from cities tend eventually to grip the countryside unless some radical events change them. This explains why urban and regional planning are components of a continuum within any country.

(d) Cities are also the receptacle of talent and constitute concentrated human resource bases. This is particularly true of primate cities which, because of their predominance nationally as well as regionally, attract educated and skilled persons from far and wide. Empirical evidence in rural-urban migration suggests that the educated and skilled constitute the longest-distance migrants because they are in great demand and are more knowledgeable of what to expect in their new abode. A few examples verify this fact. The Mexican National Survey of Urban Employment (Encuesta Nacional de Empleo Urbano, 1986) found that 45 per cent of workers in Mexico City Metropolitan Zone (MCMZ) were employed in services, the largest proportion of them engaged in health care, educational and financial services, transport and domestic service (United Nations 1991: 11-12). The first three categories involve educated and skilled persons. In Greater Cairo, which accounts for about 40 per cent of the total urban population of Egypt, services accounted for 34.2 per cent of employment end was the dominant economic sector of the country's population (United Nations, 1990: 7). As urban migrants tend to maintain strong links with their rural areas, they help in diffusing innovations and new ideas in their home areas, thereby enhancing their development. Of course, during the absence of migrants from their villages, they may also dampen prospects for village growth and development as their talents are tapped in their urban destinations at the expense of their areas of origin. But in the final analysis, cities improve the quality of life of both urban and rural populations, enabling them to respond appropriately to changing conditions.

(e) Cities are havens of investment. As cities provide economies of scale and agglomeration, they constitute havens of investment. Nationally, they present the requisite infrastructure for public investment which helps not only urban development, but also rural development through established urban-rural interfacing. With viable investment, cities generate other resources through civic governments, levying taxes and service fees and acquiring credit facilities from a variety of creditors to further urban investment as well as management activities. The economic and social investments thus made manage urban populations better and improve their quality of life, thereby enhancing their capacity to participate in productive activities.

Classical economic theories have been supported by empirical research on structural characteristics of the relationship between urbanization and economic development. In concurrence with Kuznets (1971), for instance, empirical evidence has shown that manufacturing plays a leading role in economic development, being largely responsible for the highest percentage increase in GDP, and that the growth elasticity of manufacturing is greater the lower a country's per capita income. Further, classical economic wisdom holds that the growth of manufacturing generally exceeds that of the overall growth rate of productivity in, and indeed of, the economy. This is because, for one thing, as the income elasticity of demand for manufacturing is much greater than that for food as well as for agricultural products, manufacturing can be expected to grow relatively faster and, for another, following, the classical economic thought of Adam Smith and others, manufacturing is subject to increasing returns in both static and dynamic settings. Cumulatively, the expansion of manufacturing industry also increases the pace of technical change and helps raise productivity growth in sectors other than agriculture (Singh, 1989: 19-20).

A curious point which researchers have explored is whether there is any relationship between economies of scale and "optimum city size", especially insofar as it spurs manufacturing industry. In large third-world metropolises, agglomeration economies take several forms. These include the availability of infrastructure for modern industrial undertakings (electricity, water, sewage, telecommunications, airports etc.); the availability of specialized business services, such as financial offices, legal offices, banks, trade associations, consulting services, laboratories, professional institutions and so on; the availability of large pools of skilled labour in the face of rampant urban unemployment; the availability of large-scale operations of firms, which precipitates lower costs and better services, which in turn improves the operations of other firms who purchase these inputs and services, thereby expanding markets and increased technical change; and the large metropolises provide the foci of interaction for intellectual, business, cultural, political and religious elites which have the potential to overlap more in developing countries than in developed countries (Singh, 1989: 23).

Emergence and resilience of the informal sector are considerations which have become an integral part of urbanization and its contribution to those not engaged in the formal sector. Generally, the informal sector refers to a relatively autonomous sector with "unprotected" jobs outside the formal sector which is guided by such labour legislative measures as minimum wages, health, safety and other benefits accruing to workers. Informal-sector jobs are largely casual, insecure and irregular, though they permit a large number of urban dwellers to eke out a living in the economically rigid urban areas. The industries in which informal-sector workers engage are considered marginal; they include, among others, hawking, shoeshining, carpentry, blacksmithing - the last two being particularly significant in cities where the construction industry is thriving. Yet empirical evidence on the informal sector is inconclusive. A close scrutiny of available studies (Singh, 1989: 27-28) leads to the following five conclusions which are evaluated in the context of the subject at hand:

(a) The notion that participation in the informal sector reflects urban poverty is fallacious, given that many households in the sector have, on average, higher incomes than those in the formal sector. It must be stressed also that some of those employed in the formal sector participate even more effectively in the informal sector after normal working hours, including the weekends and holidays, in order to augment their meagre incomes earned in the former.

(b) The problem of open unemployment affects educated workers more than the uneducated. For the latter, the informal sector offers a ready alternative, as the educated tend to frown on it and may, in fact, prefer remaining unemployed to joining it. This may explain why urban unemployment has been associated with poverty, using empirical evidence which is generally based on formal-sector income levels and which omits the often elusive and inaccurately reported informal-sector earnings. The ILO's multi-country study, attributed to Rodgers and reported by Singh (1989: 28), found that the levels of unemployment among the very poor (as a socio-economic class) were 11 per cent in Costa Rica (1982), 5 per cent in Guatemala City (1980) or 20.6 per cent including the underemployed, 14.8 per cent in metropolitan Panama (1983), 50 per cent among household heads in Santiago de Chile (1982) declining to 23.7 per cent by 1985, 4.5 per cent of households in Tunis (1975) and 9.5 per cent of household members in urban West Bengal (1977-78).

(c) Rampant segmentation and imperfections in the urban labour markets in the developing countries have resulted in large wage differentials within individual cities. Evidence abounds of discriminatory remuneration on the basis of sex, age, ethnicity and other elusive considerations. Again ILO's multi-country study shows that in Bombay male regular factory workers had a premium of 160 per cent over casual workers, compared with 330 per cent for female counterparts, and that the pattern was the same in Panama (Singh, 1989: 27). Of course, wage differential by education in the formal sector needs no elaboration as many studies have shown close association between poverty and low levels of education, unless the uneducated or ill-educated succeed, as they often do, in the informal sector.

(d) Economic fluctuations in the developing countries result in fluctuations of unemployment rates. Currently, with the world recession and drastic changes in the world economic order, unemployment has gripped most developing economies, crippling economic buoyancy and frustrating even the generally adaptable informal sector.

(e) The variability of measuring and estimating the contribution of the informal sector tends to conceal the existence of "disguised unemployment" in many cities in the developing world.

Rural-urban migration poses additional demands on the capacity of cities to provide land, shelter, infrastructure, services and employment; but at the same time, it relieves the demand for exactly the same needs on the part of out-migrants, which is highest in rural areas, and can only take three directions: in the absence of migration, the concentration of population on existing and already fully exploited agricultural lands; or in the case of rural-rural migration, the colonization of rural frontiers, which happens, very often, in ecologically fragile regions, with devastating consequences for the environment and for the settlers themselves (deforestation, destruction of natural habitants, decreasing productive returns on over-exploited and often inadequate land); or migration to existing urban settlements.

It may be stated that, from an environmental point of view, migration to existing urban settlements is the most desirable option.

While the high density of human activity which is characteristic of cities leads to special environmental problems, such as congestion and pollution, it is also true that cities are better places than remote and unplanned rural areas for mitigating and controlling the environmental effects of development. Urban citizens have much more leverage than isolated rural dwellers to exert pressure on government, local authorities and industry to protect their own health and to limit the impact of activities that are damaging to the environment.

Urban growth, with its high densities, may also lead to a more efficient use of limited land areas. Each productive activity has certain needs for land, but modern technology can provide solutions to land efficient development for both the urban and rural sector.

In urban settlements, for example, appropriate land-use policies based on efficient densities and development patterns can reduce the amount of land needed for settlement development, and at the same time minimize the need for transport, with consequent beneficial effects in terms of resource consumption, environmental protection and amenities for residents.

Finally, urbanization provides a partial answer to the needs, preferences and aspirations of people. Thus cities of the developing world are providing an immensely resourceful safety net for millions of dispossessed and jobless rural migrants, as well as for their own settled and growing populations. Cities also act as hosts to the needs of non-urban residents: it is often common for millions of rural dwellers to use higher-level urban services (special health care, for example) for emergency needs than can be satisfied in isolated and poorly equipped rural locations.

These considerations have led in recent years to a more constructive approach towards urbanization issues. This approach can be best summarized in the following statement from the UNDP (1990) Human Development Report: "Rapid urbanization is neither a crisis nor a tragedy. It is a challenge for the future... The focus on today's cities must move decidedly towards better management, with past failures giving way to more appropriate policies and practices".

These conclusions raise issues which should be explored more systematically in the developing countries in an attempt to unravel the role of urban centres in economic development against the background of intraurban conditions as well as externalities. They constitute research agenda for which empirical evidence should continue to be assembled.

B. Impact of urbanization on urban household income and rural-urban income differentials

The paramountcy of economic motives of rural-urban migration underlines the role of urbanization in improving, as well as its impact on, urban household incomes and in instituting urban-rural income differentials. There is a massive literature on rural-urban migration and sustainability of urban-rural links throughout the developing countries (Oberai, 1987) and with particular focus on Africa (Oucho, 1985, 1990) and Latin America (Lefeber, 1978). Migration is a catalytic process which reflects not only the "urban bias" of development (Lipton, 1977) but also the "rural-bias" of urban migrants as they try to make the best of both worlds (Oucho, 1988). It has been argued that urban bias is actually a "rich-person bias"; "the bias in public policies, investments and services (including hospitals, schools and housing) largely favours the better-off inhabitants and more powerful industrial and commercial concerns" (Hardoy and Satterthwaite, 1989: 310). This explains why the poor take the centre stage in urban problems.

The examples of Brazil, where unskilled migrants from the north-east of the country moving to Rio de Janeiro, tripled their income, and of SPaulo where a manual labourer earned income five times that of a farm labourer in that part of the country (World Bank, 1979) is by no means atypical. In African and most Latin American cities, migrants who tend to pursue education more keenly secure jobs more quickly and earn higher incomes than urban natives (Perlman, 1986, Nelson, 1971; Yap, 1970; Little, 1970). Various ILO/JASPA reports show that on the average, urban income is about four times rural income and that in some countries the ratio ranges between 4.0 and 12.0 times rural incomes. It is generally believed too that urban households save a larger fraction of their income than rural households. Thus urbanization usually has a positive impact on the national savings rate (Rogers, 1980 p. 318). This situation obtains in virtually all the developing countries, and it would serve little purpose to draw up a directory of this typical characteristic of urban-rural differential.

The advantageous position of urban residents over the rural population, it is argued, stems mainly from the "urban bias" of development, whereby the more powerful urban groups distort the allocation of resources in their favour, thereby exacerbating inequality and slowing down development (Lipton, 1977). Yet this thesis, which has commanded much appeal in analysis of urban-rural relations, need not underscore urbanrural differentials in terms of where people live; rather it should stress the dominant industry sector in urban areas vis-is agriculture in rural areas - from which the residents derive a livelihood, and in which the socio-economic class differential is inherent (Griffin, 1978).

C. Urbanization and GNP per capita

As GNP per capita reflects the performance of national economies, it has a significant relationship with urbanization. It has been argued that regardless of the precise historical sequence, the net effect of urbanization in all cases is an increase in average real income in urban areas, which also strongly affects the non-urban regions located near the centres of urban development. (Hoselitz 1969: 241). Table 6 provides self-explanatory evidence. From the table it is evident that per capita GNP increases as urbanization increases. By implication, urbanization enhances individual/household incomes as it makes imperative economic activities that are concomitant with urban modes of production.

Table 6. Total population, percentage of urban population and per capita GNP by regions of the world. 1993

Table 7. GNP per capita and percentage of urban population and rural by selected Asian NICs and ASEAN countries, 1993

The case of some Asian NICs and the ASEAN member countries points up a similar scenario (see table 7).

Table 8 contains the results of a regression analysis showing the strengh and direction of the relationship between percentage of the population in urban areas and GNP per capita. The data used are from World Development Reports of 1987 through 1992. The data are classified according to the economies at different stages of development and further by dominant characteristics to distinguish exporters, for instance. The major classifications thus are: low-income developing economies; middle-income developing economies; oil exporters; highly indebted countries; sub-Saharan Africa; high-income oil exporters; and industrial market economies. For further computational procedures of GNP and classification criteria, reference can be made to the technical notes, definitions and data notes in the World Development Reports.

The correlation coefficients between the percentage of urban population and GNP per capita in general for all the categories of economies show that GNP per capita is positively associated with the percentage of the population in urban areas. This positive relationship has been confirmed by other analysts. Based on a sample of 111 countries for example, Renaud (1981: 17-18) found a strong positive statistical relationship between per capita income and the percentage of a country's population that is urbanized. Similar positive association has also been noted between the level of urbanization and GNP growth (Welliscz, 1971: 39).

Urbanization, and the cities which it creates, play pivotal roles in the generation and transmission of innovations and serve to create conditions favouring the diversification of economic structures -including access to scientific and technical knowledge, proximity to markets, which result in the emergence of economies of scale, complementarily and agglomeration economies - all of which can be interpreted as a set of requisites necessary for economic development and growth. Empirical evidence has shown that the urban phenomenon creates the milieu for all aspects of modernization and development. Cities serve as nerve centres of information and modernization, organize the space economy and maximize the efficiency of infrastructural investment. They are usually the main concentrations of purchasing power and are thus better equipped to articulate production and coordinate exchange within the economic system. Economic development is said to occur in a specific locational matrix which is urban-industrial in composition and few developments are possible without the services of a city (United Nations., 1971, p. 12).

Table 8. Coefficient of regression results (percentage urban population and GNP per capita)

D. Urban income-generating activities and urban-rural interdependence

As nodes of economic activities, urban areas are not only an important arena for income-generating activities, but also the sine qua non of urban-rural interdependence which exists especially in third-world cities. As the capacity of urban areas to generate income is generally superior to that of rural areas, at least for individuals and households, as has been demonstrated by empirical studies, more attention is drawn in this section to urban income as a stimulus of urban-rural interdependence. The "urban bias" of development is amplified first before urban-rural interdependence is examined.

Pointers to urban bias include national governments' support of industry and other activities through special tax concessions, subsidized interest rates, tariffs and other forms of protection - all to the neglect of rural areas; direct subsidies for food, provision of infrastructure and social services which artificially lower living costs; economic policies which turn the terms of trade against agriculture, reduce rural output and increase rural-urban wage differentials, rural-urban migration and the tempo of urbanization (Squire 1981, quoted in Oberai, 1989: 8-9). Although these are some of the shortcomings that structural adjustment programmes (SAPs) are intended to rectify in the developing countries in particular, they have exacerbated rather than diminished them. It is against this background that urban-rural transfers in a variety of facets should be understood and their contribution to sustained urban-rural interdependence be appreciated. Without putting a value-judgement on urban-rural transfers, it has been established that net flows favour rural areas, even if they do not contribute immensely to their development or major structural transformation. Rondinelli's (1987: 29) argument stressing urban-rural reciprocity in terms of the development of physical, social and institutional infrastructure considers infrastructure as essential in the process, contending that:

"... investments in physical infrastructure and facilities that link towns and cities to rural areas can have a strong impact on accelerating agricultural development and generating income for rural households. Recent studies of rural-urban road investments in developing countries, for example, indicate the pervasive impact these linkages can have on agriculture and on a regional economy."

As there are studies which advance the opposite view that urban areas do in fact underdevelop their rural hinterlands, the verdict on urban-rural interface is inconclusive.

Urban income-generating activities are not limited to the informal sector. The typical African city depicted by O'Connor (1983) bears features that enhance income-generating activities by individual urban residents. These include small business enterprises (including family businesses) set up by those who were formerly in formal or informal-sector employment, which employ a small number of workers, and self-employed market vendors and hawkers. All these have very low capital intensity and sustain urban populations' livelihoods, catapulting them beyond the poverty line and helping them to manage household survival. They form part of the informal sector but with a notable difference: their survival against all odds even when the overt informal sector is crippled by government policies that attempt to make them quasi-formal or by the world economic order, including SAPs that frustrate the sector.

The best known and most discussed form of urban-rural interdependence is the transfer of goods, money and services. There has been a massive literature on this subject, initiated by some studies in Asia (Cornell, 1976), followed later by others in India (Oberai and Singh, 1983), Oceania (Skeldon, 1980), Latin America (Margin, 1959; Jongkind, 1974) and Africa (Oucho, 1985, 1990). Available literature is inconclusive about the role impact on urban-rural transfers (which have been found to be reciprocal) and especially that of urban-to-rural remittances rural development. Studies range between those advocating that remittances represent an "economy of affection" (Hyden, 1987) which end up in consumption and therefore fail to develop rural areas, to those demonstrating that remittances play a crucial role in rural development (Oucho and Mukras, 1983). It should be remembered, however, that payment of school fees is a long-term investment in human-resources development and, therefore, implies the productive role of remittances.

In the Indian Punjab, urban migrants were found to have injected technological innovations into agriculture; the out-migrants' and return migrants' households were found to be using tractors and adopting improved agricultural practices more than non-migrants' households (Oberai and Singh, 1983). This suggests that urbanization, through sustained urban-rural interrelations, contributes positively to the modernization and economic improvement of rural households. In many developing countries, urban-torural remittances of money have stimulated the rural economy, making possible the provision of improved health and educational facilities as well as the construction of modern housing, the purchasing of more farmland and the setting-up of petty trade and businesses. All these take place in rural areas which have remained economic backwaters and ill-prepared for rural investments. Indeed, in many cities of the developing world, urban remittances account for no less than one fifth of urban workers' incomes. Empirical evidence to this effect has been consistent, ranging from a study of Ghanian cities in the sixties (Caldwell, 1969), through that of Nigerian cities vis-is rural areas in the 1970s and 1980s (Adepoju, 1986) to that of Botswana (Lucas and Stark, 1985) and Kenya (Oucho and Mukras, 1983) in the late 1970s and early 1980s. Admittedly, the bulk of remittances are spent in consumption - food, payment of fees, medical attention and sponsoring further out-migration from households - and precisely so because rural areas have not been prepared for investment. A counter-argument is that urban areas tend to perpetuate rural underdevelopment. In Nigeria, for instance, it was found that urban areas sap all the human resources developed in rural areas, namely educated persons who move into Cities in search of employment (Essang and Mabawonku, 1974). But this argument fails to recognize blatant urban-rural inequities in the developing economies, including the urban bias of development. This line of thinking dominates an extensive review of the role of urban-to-rural remittances on rural development which cites cases from different developing countries (Rempel and Lobdell, 1978). The authors present the thesis that remittances do not play a decisive role in rural development. It should be remembered that urban-rural transfers do cries-cross between urban migrants and their non-migrant rural relatives and that, however small the urbanto-rural remittances may be, they sustain both economic and socio-cultural links of households subdivided into separate families by migration. To view them through economic lenses alone is to underplay their fundamental function in household networks and migrant/non-migrant relations.

From the foregoing it is clear that incomes generated in urban areas help greatly in managing urban populations and in improving their lives as well as the lives of rural populations. Also, through voluntary associations in urban areas, urban migrants have been known to pool their resources for not only improving their lot in their transient areas of residence, but also improving their rural home areas. These pooled resources have become the mainstay of supplementing government efforts in providing social services in Latin America, the islands in Oceania, Asia and Africa.

E Urbanization end employment opportunities

The classical economic thought before the late 1960s, attributed to Sir Arthur Lewis (1954) and systematized by Fei and Ranis, hence the Lewis-Fei-Ranis (LFR) model, was that rural-urban migration was a function of surplus labour in rural areas moving into labour-deficit urban areas where full or quasifull employment opportunities obtained. This influential view changed radically when Todaro (1969,1976) later found that the LFR model did not apply. He provided empirical evidence showing that rural-urban migration occurred because of migrants' expectations of higher urban incomes and that most migrants actually moved into urban unemployment; he argued that the so-called urban labour deficit was, in fact, a surplus labour situation. ILO's studies under the auspices of the World Employment Programme Research have indicated that although urban areas provide much better employment opportunities than do rural areas, unemployment is rampant in the former. It has been found that "the main cause of urban poverty is the severely limited incomes earned by the poor through gainful employment" (Oberai, 1989: 20), the increasing elusiveness of the latter pushing urban dwellers into self-employment and the informal sector. But it has also been found that open unemployment faces both the urban poor and the relatively well educated younger members of the urban middle- and higher-income groups who rely on family support while looking for jobs commensurate with their training and wage expectations or aspirations.

Thus, open unemployment is voluntary, the problem not being employment as such, but low productivity and low earnings (Berry and Sabot, 1978). It would appear from this argument, therefore, that low productivity fuels unemployment which in turn renders the unemployed poor. Yet a caveat is necessary here: that "although the poor are not simply the unemployed, and many unemployed are not poor, there is on the whole a positive relationship between poverty and unemployment" (Oberai, 1989: 20).

The argument as to whether urban-rural migration depended on surplus labour in either rural or urban areas of dual economies has resulted in two opposing schools of economic thought.

For the developing countries, the rate of the growth of the labour force, itself a result of rapid population growth, far surpasses that of employment creation. It is not surprising that some policy-makers in the developing countries, considering that the economic power of cities often generates employment opportunities, regard urbanization as a vehicle for full employment. The situation in developing countries has been exacerbated as most cities have failed to create adequate job opportunities for urban natives and migrants alike in conditions that favour labour-intensive production.

Table 9 shows the extent of unemployment (in percentage terms) among different socio-economic or income classes in selected cities from the developing world, and clearly highlights the strong correlation between urban unemployment and poverty. In all cities, except urban West Bengal (which was studied several years earlier than all others), the very poor are predominant. If this situation continued, as the World Bank (1991 a: 19) predicted it would, "urban poverty will become the most significant and politically explosive problem in the next century". In many countries the situation has become rapidly worse, making urban residents wonder whether their salvation does not lie instead in the economically less demanding rural areas.

Table 9. Urban unemployment and poverty in selected cities in the developing world, 1977-1985

F. Urbanization and environment

Urbanization is not merely a demographic-economic process, but a conversion of physical space into built environments involving the transformation of natural environmental systems into the living environments of human settlements (Bhalla, 1992). In spite of its immense benefits to individuals and society, the process of urbanization has given rise to a number of environmental problems which many municipal authorities have failed to contain. The main forms of urban environmental problems include: water, air and noise pollution; depletion of natural resources in the surrounding countryside, particularly vegetation; residential occupation of hazardous areas; and overcrowding.

Water pollution is mainly a result of inadequate domestic sanitation facilities and inadequate industrial liquid and toxic waste disposal systems. In some cities, the daily discharge of industrial wastes into water bodies (rivers, lakes and oceans) reaches millions of cubic metres, while in some countries as little as 2 per cent of sewage is treated (UNCHS, 1994, p.2). Large numbers of low-income people in developing country cities lead a precarious existence in squatter settlements, with limited access to treated potable water supplies and safe sanitation. In recent years, cholera and typhoid epidemics have started breaking out in some African cities, largely as a result of deteriorating water-supply and sanitation infrastructures.

The main causes of air pollution are uncontrolled smoke emissions from industry, motor-vehicle exhaust fumes and uncontrolled incineration of solid waste within residential and other built-up areas. At present, about 1.3 billion people, mostly in developing countries, live in urban areas that do not meet the World Health Organization (WHO) standards for airborne dust and smoke, while about 1 billion people live in cities that exceed the WHO upper limit for atmospheric sulphur dioxide (WHO, 1992).

Because of poverty, many low-income residents of developing world cities rely on affordable sources of domestic energy, mainly fuelwood and charcoal, but also crop and animal wastes: This has led to fuelwood and charcoal becoming commodities and to the indiscriminate cutting of vegetation cover in perturban areas, which, in turn, has led to soil erosion. In India, fuelwood accounts for about 50 per cent of urban domestic energy consumption, while in Botswana it accounts for 90 per cent (World Bank, 1991b).

Rapid population growth and its concentration in large developing-country cities has contributed to rising vulnerability of urban populations to natural disasters, particularly coastal and river floods, as well as land slides. This is compounded by poor, or lack of, land-use planning within many cities, reflected mainly in the rapid spread of low-income settlements into areas prone to natural hazards (UNCHS, 1990).

Most of the above problems are inevitable, but predictable, consequences of urbanization and can be resolved through the implementation of more efficient and effective urban management systems. The challenge lies in the adoption of city planning, development and management approaches which conform to the principles of sustainable development.


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United Nations Centre for Human Settlements (Habitat) (1994), Working Paper on Human Settlements, prepared for the Commission on Sustainable Development (unpublished).

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