The urbanisation trap

By The Economist online

Moving from farms to cities does not always translate to gains in income

AS A general rule, moving to work in cities is synonymous with economic growth, and the more people do the first, the more countries get of the second. The left-hand chart, drawn from the World Bank's latest World Development Report, shows the processes at work in Asian countries in 1985 to 2010. But general rules are made to be broken. As the right-hand chart shows, in many African countries an increase in the size of the urban population has not necessarily been associated with growth. Excluding the extreme case of Liberia (which had a civil war during the period in question), several of Africa’s largest countries, notably Nigeria, saw a big increase in what seem like relatively unproductive slums, and those countries that are following the Asian example (Kenya, Ghana and Ethiopia) are doing so modestly and tentatively. The report examines the role of job creation in development, and suggests that while policies to encourage jobs and to encourage growth are similar, they are not identical. Growth policies do not always pay enough attention to female or youth employment, or to the multiple problems that self-employed people have in increasing skills or improving their businesses.