Urbanization in Developing Countries
Vernon Henderson
The rapid urbanization in many developing countries over the past half century ems to have been accompanied by excessively high levels of concentration of the urban population in very large cities. Some degree of urban concentration may be desirable initially to reduce inter- and intraregional infrastructure expenditures. But in a mature system of cities, economic activity is more spread out. Standardized manufacturing production tends to be deconcentrated into smaller and medium-size metropolitan areas, whereas production in large metropolitan areas focus on rvices, rearch and development, and nonstandardized manufacturing. The costs of excessive concentration (traffic accidents, health costs from exposure to high levels of air and water pollution, and time lost to long commutes) stem from the large size of megacities and underdeveloped institutions and human resources for urban planning and management. Alleviating excessively high urban concentration requires investments in interregional trans-port and telecommunications to facilitate deconcentration of industry. It also requires fiscal deconcentration, so that interior cities can rai the fiscal resources and provide the rvices needed to compete with primate cities for industry and population.
A high degree of concentration—the share of large metropolitan areas in total urban population—characterizes the rapid urbanization in many developing countries today. That concentration is also reflected in urban primacy—the share of the larg-est city in national urban population. And it involves megacities of unparalleled size, prenting major problems in health and quality of life, international industrial com-petitiveness, management and institution building, social cohesion, and stability. What has fostered such high degrees of urban concentration in developing countries, a pattern not en in many developed areas? Has concentration become overcon-centration? If so, what are the key institutional and policy issues for alleviating overconcentration and promoting more orderly development and urbanization?
Developing countries today face greater urbanization challenges than developed countries faced. Developed countries urbanized at a comparatively leisurely pace. The United States was 40 percent urbanized in 1990, 70 percent in 1960, and 75+ per-cent in 1990. This gradual pace is in marked contrast with that in many developing countries. For example, the Republic of Korea was 40 percent urbanized in 1970 and The World Bank Rearch Obrver, vol. 17, no. 1 (Spring 2002), pp. 89–112
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78 percent urbanized by 1990. What took the United States 90 years to accomplish took Korea 20 years and Brazil 30 years.
That gradual pace, combined with relatively high gross domestic product (gdp) and education per capita at the beginning of the century, allowed time for the develop-ment of the political and economic institutions and market instruments esntial for an efficient form of urbanization and a reasonable quality of urban life. The included mechanisms for the internal governance and financing of cities, intergovernmental arrangements, regulatory and financial instruments for intercity communications and transport networks, a civil rvice with technical experti in urban and regional planning and rvice provision, and institutions for efficient functioning of national and local land markets. For rapidly urbanizing developing countries, the societal learning required to adapt rural institutions and governance to urban ones became a crash cour, leaving little room for timely experimentation and adjustment.
This article looks at the form urbanization takes—the degree of concentration within a typical institutional and policy context—rather than at urbanization itlf—the share of the national population residing in urban areas. It looks first at the basic theoretical concepts and empirical patterns governing a mature urbanized economy. What does a system of cities look like in a medium-
or high-income country with well-developed urban institutions and governance and well-functioning land and capital markets? That provides a benchmark. In looking at the urbanization process in developing countries, the article then explores why urban concentration sometimes increas strongly in developing countries. When is concentration excessive, and what are the costs of excessive concentration? What do inter- and intracountry data show? The final ction looks at the policies and institutions that help shape urbanization, in particular economic liberalization, fiscal deconcentration, intercity infrastructure investments, globalization, and urban institutions. What are the key elements for achieving reason-ably efficient urbanization that benefits most gments of the national population? Cities in a Mature Urban System
不受欢迎的人Urbanization is a natural part of development. Labor-saving technologies in agricul-ture and shifts in the composition of national output away from agriculture relea labor for industrialization. Industrialization occurs disproportionately in urban areas becau of opportunities to exploit scale economies of local agglomeration. About 70 percent of the cross-country variation in urbanization is explained by variations in gdp per capita. Figure 1 illustrates the log-linear relationship for 1990.1 It helps to have a framework to examine the link between urbanization and devel-opment and to deal with the fundamentals of urban allocation in a country. A frame-work can help structure thinking abou
t the productivity of cities—is big good?—and to understand phenomena such as product cycles and new information technologies. 90
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It can help answer questions about why cities form, what determines or limits their size at various points in time, why they grow, how they specialize in different types of production, and what determines the size distribution of cities in a country. This discussion ts the stage for examining the role of institutions and infrastructure in-vestments in urban development and for analyzing the effects of economic liberal-izations, globalization, and political decentralization on urbanization.
Why Urbanization: The Economics of Agglomeration
Economic activity agglomerates in cities becau of local external economies of scale in production—a plant’s productivity is enhanced if other plants are located nearby.Why is this? Urban models of the micro-foundations of urban externalities follow Alfred Marshall’s (1890) description of spillover benefits for a plant from others in the neighborhood—information spillovers about technology, suppli
ers, purchars,and market conditions (Fujita and Ogawa 1982); scope for local intraindustry spe-cialization of plants in specific activities (Becker and Henderson 2000); incread diversity of local suppliers to local export producers (Dixit and Stiglitz 1977; Abdel-Rahman and Fujita 1990); and arch for and matching improvements between workers and firms in local labor markets (Helsley and Strange 1990). In addition,Figure 1.
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Urbanization and Income
the proximity of buyers and llers reduces transport costs of trade (Krugman 1991) and arch costs in retailing (Caplin and Leahy 1998).
办公室恋爱Rearch suggests that plants producing standardized products (textiles, steel, ce-ramics, food processing) learn mostly from other plants in the same industry locally, so that they benefit primarily from what are called localization economies, as first docu-mented by Hoover (1948) for industries such as footwear in the United States. Recent econometric evidence for Korea shows similar benefits (box 1). In contrast, urbaniza-tion economies, deriving from the overall local scale of a metropolitan area, benefit plants engaged in nonstandardized production (special-order machinery, high-fashion ap-Box 1. Evidence on Agglomeration Economies
Econometric work has quantified the degree of local external economies, distinguishing between localization and urbanization economies. Industries subject to localization economies, which depend on local own-industry scale, tend to locate in small and medium-size specialized cities. Industries more subject to urbanization economies are drawn to large diver metropolitan areas. For Japan, Nakamura (1985) found strong evidence of localization economies in iron and steel, nonferrous meta
ls, nonelectrical machinery, transport equipment, and precision instruments and evidence of urbanization economies for such industries as publishing and furniture. For Indonesia, Henderson and Kuncoro (1996) found strong localization economies for apparel (including textiles), nonmetallic minerals, machinery (including transport equipment and electrical machinery), and miscellaneous manufacturing (toys, jewelry, musical instruments) and evidence of strong urbanization ecnomies for wood, furniture, publishing, and apparel. Results for the United States are similar (Henderson 1988).
For the Republic of Korea, Henderson, Lee, and Lee (2001) estimate urban scale economies using city industry data for 1983, 1989, and 1991–93. They examine the determinants of value added per production worker across cities by industry, controlling for capital per worker and accounting for time, city, and subindustry fixed effects. Their results on the magnitude of localization economies are reported in the table below. A coefficient of 0.06–0.08 means that a 1 percent increa in local own-industry employment results in a 0.06–0.08 percent increa in plant output. So a plant in a city with 1,000 workers in other firms in the same industry would, without changing its own inputs, increa its output by over 70 percent by moving to another city with 10,000 workers in the same industry. That is a big incentive. Henderson, Lee, and Lee (2001) show that the ranking of the magnitude of externalities exactly matches the ranking of industries by extent of spatial concentration across cities.
So heavy and transport industries tend to be concentrated in a few highly specialized cities, whereas traditional industries with low scale externalities are more disperd.
In arching for urbanization economies, Henderson, Lee, and Lee (2001) found that measures of metropolitan scale had no effect on productivity in any industry (e table 1). Drawing on Jacobs (1969) and Glaer and others (1992), Henderson, Lee, and Lee created a diversity measure for each city bad on the sum over all manufacturing industries of the squared deviations in each industry’s share of local employment from its share of national employment. In perfectly diver cities employment shares match national shares. In high-tech industries (only), Henderson, Lee, and Lee (2001) find strong significant diversity economies, where a one-standard-deviation increa in diversity increas productivity by 60 percent. This accords with the intuition that the bright lights of diver large metropolitan areas, with cross-industry fertilization of ideas, are important for evolving high-tech industries but not standard ones.
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Table 1. Magnitude of External Economies of Scale for the Republic of Korea
Urbanization economies
Localization(percentage increa in
economies productivity for one standard Industry(elasticity)deviation increa in diversity) Traditional (food, textile, apparel, wood and paper0.021*NA
products and furniture)
Heavy (basic and fabricated metals, chemicals,0.082*NA
and plastics)
Transport0.096*NA
Machinery and electrical machinery0.053*NA
High tech (computers, communication, television,0.056*0.599*
radio and scientific instruments)
*Significant at the 5 percent level.
奥秘近义词Source: Henderson, Lee, and Lee (2001).
parel, entertainment rvices, publishing), firms in interactive rvices with central-ized markets (certain financial rvices, including stock and commodity markets), and high-tech firms in rearch and development (R&D) and new products (electronics, software development) (Jacobs 1969). For example, plants engaged in product devel-opment need to get ideas and specialized employees from beyond their own industry by interacting with the scientific consulting industry, universities, the software indus-try, a diversity of suppliers—whatever tweaks the inventive process. They also need large local markets to test products and ideas locally and to get immediate feedback.
There may also be dynamic components to externalities. One is local knowledge accumulation (Rauch 1993), as in endogenous growth models (Romer 1986). Black and Henderson (1999) develop an urban growth model that suggests city sizes will grow over time, as local human capital development enhances economies of agglom-eration. They document the strong empirical relation between human capital accu-mulation in individual cities and growth of city size.
Local knowledge accumulation implies that history matters. Cities with a history of employment in a particular industry will have built up a stock of local “trade -crets,” which makes locating there muc
周八h more attractive than in cities with no ex-perience in the product. This prents an obstacle that newly industrializing cities have to overcome if they are to attract such an industry, although there is debate about the strength of this force (Holmes 1997; Rauch 1993; Glaer and others 1992; Henderson, Kuncoro, and Turner 1995).
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Factors Limiting City Sizes over Time
Although bigger cities offer higher productivity becau of scale economies, residents of bigger cities are burdened with higher costs of living—for housing, food, public Vernon Henderson93
utilities, commuting, and so on (Muth 1969; Fujita and Ogawa 1982). In reviewing evidence on Latin America (Thomas 1980) and the United States, Henderson (1988) finds a doubling or more of costs of living in moving from a small city to a large metro-politan area. Rousau (1995) calculates that living costs in Paris are 89–94 percent higher than the average for the rest of France. Richardson (1987) estimates that the marginal investment cost (including utility, public rvice, and housing costs) of absorb-ing an extra family in average urban areas of Bangladesh, Egypt, Indonesia, and Paki-stan is three times that in rural areas—higher still for the primate city of a country.
In a market economy, city size reflects a tradeoff between the scale productivity benefits of local emp
loyment growth and the cost-of-living increments of local popu-lation growth. Improvements in commuting technology, which reduce local costs of living, and local knowledge accumulation, which accentuates scale economies, sug-gest that efficient city sizes increa over time. As commuting technology continues to improve and human capital investments ri in developing countries, the sizes of cities may continue to increa well into the 21st century, just as they did through-out much of the 20th century. At the same time, national population growth means that the number of cities may need to grow to accommodate population increas. Generally, both the size and number of cities have grown with national population growth in most countries over the past century.
Urban Specialization, Diversification, and Productivity
Most employment in a city (55–60 percent, often more) is engaged in nontraded goods production, such as housing, local retailing, local rvices, and local government. But as a result of the factors already discusd, mature medium-size and smaller cities will be somewhat specialized in the products and to some extent the rvices they pro-duce for export (to other cities or abroad). Why is this? For products experiencing localization economies, cities specialize becau adding a different industry does not help own-industry productivity, though it caus the cost of living to escalate. Such products include primary metals, pulp and paper, textiles, and machinery. Some of the products in
volve natural resource u and weight reduction in production, suggesting hinterland location. Specialization also extends to the rvice ctor for market and transport node towns, state government and education centers, and agricultural rvices towns, as well as certain areas of health, recreation, and stan-dardized business rvices.
Theory and evidence suggest that the size of specialization cities is positively re-lated to the degree of localization economies of the good in which the city specializes. So steel and auto cities tend to be larger than textile cities and traditional rvice cen-ters, which in turn are larger than pulp and paper and food-processing cities. As re-ported in Henderson (1988), this phenomenon of specialization has been studied for Brazil, India, Korea, and the United States (e box 2), among other countries.
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