Challenges of Urban Growth in Developing Countries: Income Inequality & Urbanization, Apuntes de Historia

¡Descarga Challenges of Urban Growth in Developing Countries: Income Inequality & Urbanization y más Apuntes en PDF de Historia solo en Docsity! urbanization and per capita income In 1950 some 275 million people were living in cities in the developing world (38% of the 724 million total population), by 2010 the world’s urban population had surpassed 3.4 billion, with over three-quarters of all urban dwellers living in metropolitan areas of low- and middle-income countries. a. The big question is how will cities cope – economically, environmentally, and politically – with such acute concentrations? Agglomeration economies and economies of scale: skilled workers, cheap transport, social and cultural amenities a.ii. Social costs: crime, pollution, and congestion b. Urban bias: Notion that most governments in developing countries favor the urban sector in their development policies, thereby creating a widening gap between the urban and rural economies. a.iii. This aspect is debatable. Why? c. Slum settlements: represent over one-third of the urban population in all developing countries a.iv. Partially to blame are outdated building codes People cannot afford to build a ‘legal’ home and resort to building what they can in shanty towns/favelas I. The role of cities d. To a large part cities are formed by cost-advantages to producers and consumers alike oducers and consumers from location in cities and towns, which take the forms of urbanization economies and localization economies I.1. Urbanization economies: effects associated with the general growth of a concentrated geographic region I.2. Localization economies: effects captured by particular sectors of the conomyi.e. Finance, automobile fficient Urban Scale a.vii. The higher the urban density, the higher the costs (in general) I.3. Longer commutes, greater transportation costs, lead to workers demanding higher wages to cover these costs I.4. Under competitive forces, and all other things being equal and if workers are freely mobile, a worker in large city with higher wages but higher costs of living is no better off in real material terms than a worker with comparable education, experience, ability, and health in a small city with lower wage and lower cost of living. II. The Urban Giantism Problem e. The main transportation routes of a country are typically the result of colonial legacy. f. Hub-and-spoke system: the capital city is located in the middle a.viii. Eased the extraction of natural resources a.ix. Facilitated the movement of troops from the capital to outlying towns to suppress revolts g. First-city bias f public investment and incentives for private investment in relation to the country’s second-largest city and other smaller cities. h. Causes of urban giantism a.xi. Likely a result of hub-and-spoke transportation systems, a.xii. The largest city is also more likely to be the capital I.5. Leads to a political culture of rent seeking ernational trade, population and economic activity have an incentive to concentrate in a single city to largely to avoid transport costs rthrow) must provide ‘bread and circuses’ for the first city (typically the capital) to prevent unrest. This perpetuates a cycle of migration. III. The urban informal sector i. Informal sector: the part of the urban economy of developing countries characterized by small competitive induvial or family firms, petty retail trade and services, labor-intensive methods, free entry, and market-determined factor and product prices ically operate like monopolistically competitive firms with ease of entry, excess capacity, and competition driving profits (incomes) a.xvi. Outside of government labor regulations a.xvii. Generally unskilled a.xviii. Less formal education j. Lack access to financial capital policies for the urban informal sector a.xix. Dependence between the formal sector and informal sector I.6. Formal sector wants cheap inputs and wage goods for its workers I.7. Informal sector depends on the formal sector for income and clientele l sector is merely a holding ground for people awaiting entry into the formal sector (transitional phase) or whether it is here to stay I.8. And whether it should be promoted as a major source of employment and income for the urban labor force I.9. For this to be possible, output must grow at an even faster rate, since employment in this sector increases less than proportionately in relation to output. a.xxi. Other scattered evidence (up for dispute…) I.10. Informal sector generates surpluses even in hostile policy environments that deny advantages of credit, foreign exchange, and tax concessions I.11. Low capital intensity relative to the formal sector employees I.12. Providing access to training and apprenticeships at substantially lower costs than by providing formal institutions and the formal sector. The informal market can play an important role in human capital formation. I.13. More efficient allocation of resources, as informal sector is likely to adopt technologies and make use of local resources I.14. Important role in recycling waste materials I.15. Ensure increased distribution of the benefits of development to the poor k. International Labor Organization Recommendations a.xxii. Governments need to abandon their hostility toward the informal sector Governments should facilitate training in the areas that are most beneficial to the urban economy a.xxiv. Open/ease up credit markets to permit enterprises to expand a.xxv. Better living conditions need to be provided IV. Migration and Development l. Migration worsens rural-urban structural imbalances in two ways ive to urban population growth. Their presence tends to swell the urban labor supply – while depleting the rural areas of human capital. Demand side: urban job creation is generally more difficult and costly to accomplish than rural job creation. m. Due to the substantial complementary resource inputs for most jobsFive policy Implications Imbalances in urban-rural employment opportunities caused by – first city bias of development strategies must be reduced rban unemployment problem because it creates a paradox where more urban employment leads to higher levels of urban unemployment.