Urbanization is Not Necessarily a Driver of Wealth

Cities have historically been the places where wealth is most likely to be created. That is still true, but it is less true in cities of developing countries than in the richer countries, depending especially upon the geographic region under discussion. The latest World Development Report (2013) from the World Bank focuses on jobs, and in that report there is a comparison of gross domestic product and percent urban over time in richer and poorer countries. The comparison is disheartening, as the Atlantic Wire notes:

Urbanization usually leads to higher GDP because of higher levels of productivity, the report says, which is illustrated in the graph to the left [see the article]. All five of the East Asia and Pacific countries in the graph show a steady increase in GDP per capita as people move to cities. But that did not happen for Sub-Saharan Africa; the graph on the right shows a sporadic relationship between urbanization and GDP. Part of the reason may be because much of non-farm work in Africa is from microenterprises and household businesses that do not earn much. "These businesses make a significant contribution to gross job creation and destruction," the report says, "although not necessarily to net job creation and productivity growth."

With population growth rates being higher in Sub-Saharan Africa than anywhere else in the world, these are issues of global concern. Indeed, the front page of the World Bank website features a blog post by Wolfgang Fengler talking about the struggle in Africa to bring its life expectancy up, and a more hopeful story suggesting that Africa could feed itself if the sub-continent were to implement a variety of policy changes outlined by the Bank.