Journal Issue

Cities in developing countries: 1975-2000: Facing the challenge of urban growth

International Monetary Fund. External Relations Dept.
Published Date:
March 1976
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Michael A. Cohen

The rapid growth of cities in developing countries has been a subject of concern of development planners and policymakers since the early 1960s. Rural-urban migration and the unchanneled physical growth of cities as diverse as Lima, Manila, or Nairobi have created severe problems of generating employment and providing urban services. Though frequently described as an integral part of economic development, the urbanization process has not, however, received the sustained, analytic attention it deserves. The following examination outlines the magnitude and dimensions of the task facing cities in developing countries to the year 2000.

Present urbanization in less developed countries (LDCs) differs from the experience of developed countries as a result of four important factors:

  • rapid population growth;
  • gradual decline in some countries of available agricultural land per capita;
  • decline in costs of transportation and communication; and
  • relatively fixed territorial boundaries and barriers to international migration.

The increase in population growth during the twentieth century is the most important factor distinguishing present from past urbanization. In the period of rapid urbanization in Europe, national population growth rates were typically around 0.5 per cent a year. In contrast, the rates for developing countries today are usually between 2.5 per cent and 3 per cent a year. These much higher rates of population growth have resulted both in larger absolute migration to the cities and natural population increases within the cities. The consequent pressure to absorb large numbers of people through the provision of employment and services has led to a type of urbanization that is qualitatively different from that in the past and requires different policy responses.

At the same time the increasing shortage of agricultural land available to low-income rural populations who cannot afford capital-intensive methods has also served to increase population pressures on the cities in most countries. The ratio of population to agricultural land in most developing countries far exceeds that found in Europe or North America during their periods of rapid urbanization. Increases in areas available for cultivation have slowed down in recent years, with many countries reaching the practical limits of expansion already.

This article is based on Bank Staff Working Paper No. 209, “The Task Ahead for the Cities of the Developing Countries,” by George Beier, Anthony Churchill, Michael Cohen, and Bertrand Renaud (obtainable from the Bank Publications Office).

The constraint on land development for agriculture is certainly not absolute, given the experiments with sea-farming, jungle clearance, and desert reclamation, but the cost of these new operations can be very high. Most future increases in agricultural output will have to come from more productive cultivation of existing land, by taking advantage of the many profitable opportunities involving irrigation, double cropping, and fertilizer and pesticide application, as well as improved farm management. Failure to use these methods to increase output will increase pressures on individual families in expanding communities to migrate to urban areas.

Another factor contributing to rapid urbanization is the widespread diffusion of modern communications and transportation, which encourages population movement by providing information concerning urban opportunities and reduces the cost of migration. This occurs within relatively fixed territorial boundaries which do not allow, on any realistic short-term or medium-term political assumptions, for major adjustments in national living space, natural resources, or the free migration of surplus populations.

Larger task before LDCs

Taken together, these four factors suggest that LDCs are facing a larger absolute task of urbanizing more people within a shorter period of time than did developed countries.

In the next 25 years, the developing countries will add 1.3 billion inhabitants to their urban populations, bringing the total to 2.1 billion, or almost twice as many people as presently inhabit the cities of the developed countries, which will be adding 0.3 billion over the same period. In 1975 there were 90 cities in the developing world with populations of over a million; by the year 2000, there will be close to 300 such cities. In this period, the urban populations of these countries will grow from 28 per cent of the total population to over 42 per cent. For the first time in history, the increase in the urban population of the developing world will exceed that of the rural population. Approximately two thirds of the total increase in population will be located in urban areas.

Patterns of urbanization

Within the developing world, four patterns of urbanization can be identified (see Table 1):

Table 1Urbanization patterns in a sample of less developed countries
CountryPer capita GNP level (in 1972 US$)Size of population (In millions)Percentage of population that is urbanCompound growth rata of urban populationCompound growth rate of rural population
Type I
Type II
Type III
Ivory Coast3401.
Upper Volta700.
Type IV
China, People’s Republic of170207.5630.4478.4673.624.841.54.312.750.84–0.07
Sources: UN Urban-Rural Projections from 1950-2000, October 1974 (medium tempo with medium variant); World Bank Atlas, 1974.
Sources: UN Urban-Rural Projections from 1950-2000, October 1974 (medium tempo with medium variant); World Bank Atlas, 1974.

Type 1. This group includes those countries in which the process of urbanization is well under way. The population is already more than half urban and has relatively high incomes, and there is little pressure of population on arable land and natural resources. The end of the urbanization process in this group will probably occur before the turn of the century, when most of the population will be in urban areas and rural areas will begin to experience absolute declines.

Type 2. In these countries the urbanization experience is more recent. Over half of the population is still in rural areas. Population pressures exist on the land and incomes are relatively low. If population pressures can be eased and resource constraints overcome, this group of countries by the turn of the century could probably reach levels of urbanization similar to those found in the Type 1 countries today.

Type 3. This group of countries is predominantly rural but urbanizing rapidly. Even so, by the year 2000 they will still be predominantly rural with high rates of rural population growth. The issue is whether the race between population growth and resources will leave any margin for increases in per capita incomes.

Type 4. These countries are dominated by severe pressures on the land in largely rural, subsistence-level societies. If the projected population growth rates are sustainable, these countries will still be characterized in the year 2000 by large and growing rural populations living in absolute poverty.

This typology is a convenient way of grouping the growth paths likely to be followed by most LDCs. No attempt has been made to fit all countries of the world into this framework; however, a representative sample has been selected within each of the four types of countries to show projected urban growth to the year 2000 in Table 1.

The absolute scale of projected urban growth in the next quarter of the century is unprecedented. While estimates and projections are hazardous, given the complex interaction between rural and urban growth, some characteristics of future growth are evident now.

First, over 50 per cent of projected urban growth in most cases (and up to 70–80 per cent in the more urban economies) is nonmigratory—that is, it is the result of natural growth of populations already residing in urban areas. Second, very rapid (a sustained 4 per cent a year) rural income growth would still leave the predominantly rural economies with very poor rural sectors in the year 2000. Lower growth (at historical rates) would produce rural per capita income stagnation in these countries. If rural incomes stagnate while urban incomes continue to grow, migration to cities would probably increase, possibly beyond the UN estimates of likely migration. If rural income stagnation is accompanied by a similar leveling off or decline in urban areas, then migration would decline. The likelihood of these alternative patterns varies according to the existing distribution of population and income opportunities between the rural and urban sectors within individual countries.

It may also be said that the UN projections, computed according to a UN method based on the differences between urban and rural growth rates, may under-estimate the rate of growth of urban population for large countries, such as Brazil or Mexico, that are already substantially urbanized. Further, many already large cities will continue to grow at rapid rates, leading to the proliferation of very large cities (see Table 2). While the growth of these metropolitan centers is not necessarily inevitable, many powerful economic and social forces appear to be encouraging the trend toward concentration rather than dispersion of urban populations.

Table 2Populations of selected urban areas, 1950–2000(In millions)
Urban area1950Average annual

rate of growth
1975Average annual

rate of growth
Developing countries
Type 1(Per cent)(Per cent)
Mexico City2.95.410.94.431.5
Buenos Aires4.
São Paulo2.
Rio de Janeiro2.
Type 2
Type 3
Type 4
Developed countries
New York12.31.317.01.322.2
Source: UN, City Projections (medium tempo, medium variant). December 1974.
Source: UN, City Projections (medium tempo, medium variant). December 1974.

The expanding city

Large cities exist because of their competitive advantage for industrial production and the economies of scale associated with increasing urban size. Economies of scale are generated within industries producing both locally consumed and export goods. Whether they are resource-oriented, market-oriented, or labor-oriented industries, one would expect diseconomies of scale to occur within each industry at a given location as the supply cost of local inputs rises. However, in addition to economies of scale within each industry, there are also economies external to each industry generated by the clustering of suppliers and customers within the same urban area leading to substantial savings in transportation, communications, and training costs, for example. These serve to reinforce the tendency toward large city size.

There are, however, also disadvantages to large city size. The expansion of city area and the growth of population may increase the costs of transportation, land, and housing. Increased distances between residence and workplace bring increased costs in commuting time, transportation, and fuel. More generally, the costs of access to desired goods and services may increase, particularly if areas of the city take on specific functions, requiring residents to travel throughout the city to obtain the full basket of goods and services. Increased complexity, coupled with growing numbers of people, can also produce so-called harmful externalities, such as congestion and pollution, which by themselves also increase the costs of urban residence. Despite these disadvantages, which exist in cities of all sizes and yet seem significant only in large cities, it should not be expected that cities will stop growing when they reach certain sizes. There is no “optimum city size,” i.e., an optimum population level for all cities, but there may be an optimum size for individual cities, depending on their productive and spatial characteristics. Determination of that optimum level will have to be made by people who consider living in it. If the costs of urban residence—finding a job and obtaining necessary services—are too great, in relation to the costs of staying in rural areas, then people will not come. That point, however, does not appear to have been reached in most cities in developing countries.

Increasing absorptive capacity

Given the tremendous demographic pressures, the policy problem for LDCs is how to increase the absorptive capacity of their cities. Opportunities must be increased and diversified both for individuals and for groups to obtain an efficient and equitable combination of the components of real income: income from earnings from assets and from services. First and foremost, cities must be able to employ their increased populations productively, thereby generating many more private incomes while increasing national and urban productivity. Increased income from earnings must be accompanied by improved access to other sources of income, such as services and education.

Increasing absorptive capacity must be attacked at two levels: national development policy and urban policy. At the national level, it must be recognized that national policy decisions, such as tariffs or industrial investment decisions, directly affect the ability of cities to generate employment for growing populations. Biases against rural areas through the location of essential services only in urban areas can also contribute to increased migration to cities. Policies affecting population growth and distribution, income distribution, and spatial location of investment all have immediate consequences for the rate and character of urban growth.

At the city level, government policies must be designed to generate, not frustrate employment. Policies toward the informal sector (those nonprotected economic activities outside formal markets) must encourage the growth of activities which can contribute significantly to the total productivity and income of the city. Similarly, present biases toward high standards for urban services must be reoriented toward service levels which the majority of urban residents can afford. These biases are reinforced by investment decisions, exclusionary standards, pricing policies, and administrative procedures. All of these must be re-examined in terms of their long-term role in permitting cities to meet the needs of much larger populations. Most importantly, for both employment and services, the public sector must not create obstacles which frustrate the efforts of individuals and households to improve their incomes, either through creating small businesses or building houses using self-help methods.

Interventions and priorities

Increasing the absorptive capacity of cities requires interventions from both national and urban institutions. Where and how these interventions should occur will depend on individual country and city conditions. It will also depend on the time and resources available to planners and policymakers. Not all programs to combat urban poverty will be located in urban areas or specifically directed at the urban poor. The diversity of the problems and the complexity of their causes suggest a broader framework than one which encompasses only poor households. The earlier discussion of the rural sector and the interplay between “push” and “pull” factors leading to migration to cities suggest that rural and urban conditions are interdependent.

Within this approach to the growing problems of the cities, it is nevertheless important to define priorities for individual countries. Based on the typology of urbanization experiences of the LDCs presented above, it is clear that priorities will vary significantly among the four types of countries. If the relatively wealthy Latin American countries can focus on policy improvements within cities, such as improved distribution of urban services, the much poorer countries of Asia, such as India or Pakistan, must continue their efforts to improve national productivity, particularly in rural areas. Lying in between these two extremes are the dynamic economies, such as Korea and Malaysia, which have generated employment, but have not matched population growth with increased urban services. The African countries present another variation: rapid urban growth, with few jobs or services, but also the opportunity to plan for the future of cities which have not yet grown to unmanageable sizes. Each of these urbanization experiences depends on particular historical conditions which must be appreciated in order to anticipate the future needs of individuals, households, cities, and countries.

With few exceptions, urbanization is a strong and healthy part of the process of economic development and an inevitable result of rapid population growth. Whether the process is as productive as possible—in terms of the political, social, and economic well-being of the present and future inhabitants of these cities—will depend on the extent to which national and city governments are prepared to recognize and to take positive measures to accommodate this growth. All too often the response is either to ignore the problems of the future or to hope that somehow they will disappear. In either case the result is neglect, a neglect which is particularly unjustifiable because the future problems of cities in the developing countries will have been identified long before the real crisis is reached.

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