Role of the Cities

Agglomeration economies - To a large degree, cities are formed because they provide cost advantages to producers and consumers
from location in cities and towns, which take the forms of urbanization economies and localization economies.

Two forms of agglomeration economies:

Urbanization (general) economies are effects associated with the general growth of a
concentrated geographic region.
Localization (industrial or sector) economies are effects captured by particular sectors of
the economy, such as finance or automobiles, as they grow within an area.

The Urban Giantism Problem

Urban Giantism the phenomenon of urban settlements growing disproportionately large in
size due to rapid migration of people from other areas to these urban settlements. It occurs
when capital cities or other “urban giants” suffer from enormous levels of congestion, but
adequate midsize cities that might provide alternative locations for growth are lacking the problem of congestion.

●​ There may be general urban bias

●​ Cities are capital intensive so may expect large cities commonly located in developed countries
●​ But urbanization in developing countries has taken place at unexpectedly rapid pace
●​ Huge informal sectors in shantytowns, favelas
●​ Large fraction of workers outside formal sector
●​ Much urban growth is in mid-size cities, but urban bias remains a serious issue in many developing countries

First-City Bias: occurs when a country’s largest or “first place” city receives a disproportionately large share of public investment
and incentives for private investment in relation to the country’s second-largest city and other smaller cities. As a result, the first city
receives a disproportionately and inefficiently large share of population and economic activity.

Causes of Urban Giantism:

●​ Import substitution industrialization: less trade, incentive to concentrate in a single city largely to avoid transportation
costs
●​ "Bread and circuses" to prevent unrest (evidence: stable democracies vs. unstable
dictatorships)
●​ Hub and spoke transportation system (rather than web) makes transport costs high for small cities
●​ Compounding effect of locating the national capital in the largest city

The Urban Informal Sector

Informal sector - The part of the urban economy of developing countries characterized by
small competitive individual or family firms, pretty retail trade and services, labor-intensive methods, free entry, and
market-determined factor and product prices.

The Informal sector gained attention in the 1950s when researchers observed that massive urban labor force growth did not
higher unemployment rates in formal-sector statistic. Instead, new entrants created their own employment opportunities or joined
and street vending to knife sharpening and selling fireworks. Over time, some informal-sector entrepreneurs progressed to the
formal economy,transitioning to legally registered enterprises.

Policies for the urban informal sector

The Nobel Laureate Sir Arthur Lewis in the 1950s viewed traditional-sector workers, petty trades such as newspaper hawkers, as
unproductive and essentially engaged in distractions from the main urban work of industrialization. But if wages are persistently
higher in very competitive activities such as urban informal work than in rural work, this reflects higher productivity as well.
UN-Habitat, the World Bank and other agencies have places increasing emphasis on
improved urban development. The new focus is on how to make cities in developing countries more dynamic engines of growth and
more livable environments, and it promises to be one of the more important streams of emerging research and policy analysis in
economic development in coming years.

Women in the informal sector

 In some regions of the world, women predominate among rural-urban migration and may even comprise the majority of the
urban population.

Rural-urban migration patterns

Historically many of these women in Latin Amerika,Asia and Africa migrate to seek economic opportunity. Despite this,many
are unable to find employment in the formal sector,which remains dominated by men. As a consequence, women often represent the
bulk of the informal-sector labor supply, working for low wages at unstable jobs with no employee or social security benefits.

Female-Headed Household
Restricted to low-productivity informal-sector employment and experience higher
dependency burdens, they are more likely to be poor and malnourished and less likely to obtain formal education, health care, or
clean water and sanitation, often remaining effectively excluded from government services. Have children who are more likely to
drop out of school and engage in work to support the family.

Restricted Access to Capital

Many women run small business ventures or microenterprises that require little or no start-up capital and often involve the
marketing of homemade foodstuffs and handicrafts. Though women's restricted access to capital leads to high rates of return on their
tiny investments, the extremely low capital-labor ratios confine women to low-productivity undertakings.

Migration and Development

●​ Rural-to-urban migration was viewed positively until recently
●​ The current view is that this migration is greater than the urban areas' abilities to create jobs and provide social services
Toward an Economic Theory of Rural-Urban Migration
A Verbal Description of the Todaro Model
●​ Migration is a rational decision
●​ The decision depends on expected rather than actual wage differentials
●​ The probability of obtaining a city job is inversely related to the urban unemployment rate
●​ High rates of migration are outcomes of rural urban imbalances

Five Policy Implications

●​ Reduction of urban bias
●​ Imbalances in expected income opportunities is crucial
●​ Indiscriminate educational expansion fosters increased migration and unemployment
●​ Wage subsidies and scarcity factor pricing can be counterproductive
●​ Programs of integrated rural development should be encourage

CONCLUSION: A COMPREHENSIVE URBANIZATION, MIGRATION, AND

EMPLOYMENT STRATEGY
1.​ Creating an appropriate rural-urban economic balance. A more appropriate balance between rural and urban economic
opportunities appears to be indispensable to ameliorating both urban and rural unemployment problems and to slowing the
pace of rural-urban migration.
2.​ Expansion of small-scale, labor-intensive industries. The composition or "product mix" of output has obvious effects on
the magnitude (and in many cases the location) of employment opportunities because some products (often basic consumer
goods) require more labor per unit of output and per unit of capital than others.
3.​ Eliminating factor price distortions. There is ample evidence to demonstrate that correcting factor price
distortions-primarily by eliminating various capital subsidies and curtailing the growth of urban wages through
market-based pricing-would increase employment opportunities and make better use of scarce capital resources.
4.​ Choosing appropriate labor-intensive technologies of production. One of the principal factors inhibiting the success of
any long-run program of employment creation in both urban industry and rural agriculture is the almost complete
technological dependence on (typically laborsaving) machinery and equipment from the developed countries.
5.​ Modifying the linkage between education and employment. The emergence of the phenomenon of the educated
unemployed is calling into question the appropriateness of the massive quantitative expansion of educational systems,
especially at the higher levels. Formal education has become the rationing tunnel through which all prospective jobholders
must pass.
6.​ Reducing population growth. This is most efficiently accomplished through reductions in absolute poverty and inequality,
particularly for women, along with the expanded provision of family-planning and rural health services. The labor force
 size for the next two decades is already determined by today's birth rates, and hidden momentum of population growth
applies as well to labor force growth.
7.​ Decentralizing authority to cities and neighborhoods. Experience shows that decentralizaton of authority to
municipalities is an essential step in the improvement of urban policies and the quality of public services. Local conditions
vary greatly among small and large cities, as well as across different national regions, and policies need to be designed to
reflect these differences.

The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
●​ The Malthusian Population Trap - the idea that rising population and diminishing returns to fixed factors result in low
levels of living (population trap)
●​ Criticisms of the Malthusian Model - Impact of technological progress and currently no positive correlation between
population growth and levels of per capita income in the data.
●​ Microeconomics of family size; individual and not aggregate variables.

Implications that fertility may be lower:

●​ Raise women’s education, role, and status
●​ More female non-agricultural wage employment
●​ Rise in family income levels
●​ Reduction in infant mortality
●​ Development of old-ages and social security
●​ Expanded schooling opportunities

The Consequences of High Fertility: Some Conflicting Perspectives

1.
a.​ Population Growth “It’s Not a Real Problem.” The problem is not population growth but other issues:
●​ Underdevelopment - where certain regions or countries experience insufficient economic social, and political
development in comparison to others, which is frequently caused by historical, institutional, or structural issues.
●​ World Resource Depletion and Environmental Destruction
●​ Population Distribution - how people live in patterns. The population of the world is not distributed evenly. The
population of sparsely populated areas is small. In densely populated areas, there are a lot of people. Densely crowded
areas are typically challenging to live in.
 ●​ Subordination of Women - Women are trying to break out of their disadvantaged position by shattering stereotypes,
speaking out for themselves, and advocating for equal rights. They have achieved their status through centuries of struggle
and numerous waves of feminism.
b.​ Overpopulation is a deliberately Contrived False Issue.
c.​ Population Growth is a Desirable Phenomenon
2.
a.​ Population expansion can become a major issue when it outpaces resources, infrastructure, and economic development.
Here are some of the primary reasons why unchecked population expansion might be problematic:
●​ Resource Scarcity - a rapidly rising population raises the need for basic resources such as food, water, and energy.
Overconsumption can result in the depletion of natural resources, deforestation, and soil deterioration.
●​ Environmental Degradation - More people implies more pollution, deforestation, and carbon emissions, which
accelerates climate change.
●​ Economic Struggles - High population growth might result in unemployment and underemployment if job creation does
not keep up. It places a strain on public services such as healthcare, education, and housing.
●​ Food Insecurity - Demand for food rises, and if agricultural production cannot keep up, prices rise, resulting in
malnutrition and starvation.
●​ Infrastructure and Urban Challenges - Overcrowded cities result in slums, poor sanitation, and insufficient public
transit. Healthcare and education systems get overburdened, resulting in lower service quality.
●​ Social and Political Instability - Competition over resources, particularly land, water, and jobs, can result in war. High
young populations in weak economies may fuel politics unrest.
b.​ Extremist Arguments - Competition over resources, particularly land, water, and jobs, can result in war. High young
populations in weak economies may fuel political instability.
c.​ Theoretical Arguments - The reasoning process is founded on abstract ideas, logical reasoning, and conceptual
frameworks rather than empirical data or practical application.
d.​ Empirical Arguments - This reasoning method is based on observations, experiments, and real-world evidence. These
arguments are based on evidence that can be tested, measured, and verified.
●​ Lower Economic Growth - refers to a slowing in the growth of a country’s GDP overtime
●​ Poverty - state of one who lacks a common or socially acceptable amount of money or material belongings.
●​ Adverse Impact on education - refers to elements that have a negative effect on educational quality, accessibility, and
outcomes.
●​ Food Issues - refers to issues linked to food production, distribution, access, and consumption, which influence food
security, nutrition, and sustainability.
●​ Impact on the Environment - refers to how human activities, natural processes, or technology advancements impact the
Earth's ecosystems, biodiversity, and climate.
●​ Frictions over International Migration - refers to difficulties, disagreements, and conflicts that emerge between
countries, governments, political groups, and citizens as a result of cross-border movement.
3. Economic Consequences:
High fertility can strain resources, slow economic growth, and increase poverty and inequality. However, some argue that a larger
population can lead to a bigger workforce and economic growth if managed effectively.
4. Social Consequences:
High fertility often leads to lower investments in child education and health, perpetuating
cycles of poverty. On the other hand, in some cultures, large families are seen as a source of social security and support.
5. Environmental Consequence:
Rapid population growth can exacerbate environmental degradation and resource depletion. Conversely, some argue that
technological advancements can mitigate these effects.

Population Growth and Economic Development: Causes, Consequences, and Controversies

CAUSES:
Population Growth
1.​ Falling mortality rates
The primary cause of population growth is an imbalance between births and deaths. The infant mortality rate has decreased
globally, with 4.1 million infant deaths in 2017 compared to 8.8million in 1990, according to the World Health Organization
(WHO). Falling mortality rates are certainly nothing to complain about either, but widespread longevity does contribute to the
mathematics of increasing population numbers.
 2.​ Underutilized contraceptive
The global fertility rate has fallen steadily over the years, down from an average of 5 children per woman in 1950 to 2.4 children
per woman today, according to the UN Population Division.Along with that promising trend, contraceptive use has slowly but
steadily increased globally,rising from 54% in 1990 to 57.4% in 2015. Yet, on the whole, contraceptive use is still underutilized.
3.​ Lack of female education
Although female access to education has increased over the years, the gender gap remains. Roughly 130 million girls worldwide
are out of school currently, and an estimated 15 million girls of primary school age will never learn to read and write, compared with
10 million boys. Increasing and encouraging education among women and girls can have a number of positive ripple effects,
including delayed childbearing, healthier children, and an increase in workforce participation. Plenty of evidence suggests a
negative correlation between female education and fertility rates.
Economic Development
1.​ Physical Capital
It consists of tangible, human-made goods that assist in the process of creating a product or service. The machinery, buildings,
office or warehouse supplies, vehicles, and computers that a company owns are all considered part of its physical capital. In
neoclassical economic theory, factors of production are the inputs required to engage in the production of goods or services in
pursuit of profit. Economists generally agree that there are three main factors of production:
●​ Land, natural resources, and real estate
●​ Human capital
●​ Physical capital
2.​ Improvements of Technology
Technological progress allows for the more efficient production of more and better goods and services, which is what prosperity
depends on.The mechanisms through which technology is developed, adopted and used in production are complex. Their more
detailed analysis can allow for new findings that could have important impacts in many areas of policy, including science policy,
research and development, industrial policy, and both national and regional development policies.
3.​ Labor Force
Increasing the labor force necessarily increases the amount of output that must be consumed in order to provide for the basic
subsistence of the new workers, so the new workers need to be at least productive enough to offset this and not be net consumers.

CONTROVERSIES:
Population Growth
1.​ Overpopulation Concerns:
●​ Environmental Impact- Some scientists warn that continued population growth exacerbates environmental degradation,
leading to resource depletion and loss of biodiversity. For instance, the "World Scientists' Warning to Humanity"
emphasizes the need to limit population growth to achieve sustainability.
●​ Ethical Issues in Population Control- Historical instances of forced sterilizations and strict birth control policies, such as
China's one-child policy, have raised ethical concerns regarding individual rights and bodily autonomy. Population control
measures have sometimes infringed upon women's reproductive rights, leading to debates about the balance between
societal goals and individual freedoms.

Economic Development
1.​ Environmental Sustainability vs. Economic Growth
Efforts to stimulate economic growth by reducing environmental regulations have sparked
debates about the long-term sustainability of such approaches. For example, the European
The Commission's shift to reduce green and social disclosure rules has been criticized for potentially undermining environmental
goals.
2.​ Economic Models and Inequality
The UK's recent economic strategies, resembling the Washington Consensus
model—emphasizing privatization and deregulation—have been criticized for leading to
instability and increased inequality, similar to outcomes observed in some developing countries.
3.​ Technological Solutions and Social Implications
In regions like Silicon Valley, there's a movement advocating for increased birth rates to ensure economic growth and innovation.
This approach raises questions about the societal implications and ethical considerations of promoting higher fertility rates.
4.​ Political Redistributions and Regional Disparities
In India, plans to redraw parliamentary constituencies based on new census data have been criticized for potentially increasing
political power in populous northern states, thereby
marginalizing the economically vibrant southern states. This move could deepen regional
disparities and affect economic development across different regions.

CONSEQUENCES:
Population Growth
1.​ Resource Depletion
As the population continues to expand, there's an increased demand for resources like water,energy, and raw materials. Over
time, these resources will become more scarce, leading to competition for access and potentially even causing conflict or price
hikes.
2.​ Environmental Degradation
Rapid population growth contributes to higher waste production, including sewage,
pollution, and carbon emissions. This can result in air and water pollution, deforestation, and
faster depletion of natural habitats, leading to biodiversity loss.
3.​ Economic Strain
A surging population can put a strain on economic resources, especially in regions that are not prepared for the influx. This can
lead to increased unemployment, poverty, and demands on services like education, healthcare, and housing.
4.​ Infrastructure and Services
Growing populations need more infrastructure like roads, schools, and hospitals. In many
burgeoning cities, infrastructure development can't keep pace with population growth, leading to overcrowded transportation
systems, inadequate health and education facilities, and strained public services.
5.​ Food and Water Scarcity
As the global population increases, so does the demand for food and clean water. This can lead to overexploited fisheries,
overgrazed pastures, and groundwater depletion, making it challenging to sustain the growing global community. Over-farming and
industrial-scale farming also have negative effects on the environment, compounding these issues.

Economic Development
1.​ Increased Incomes
Economic growth often leads to higher income levels, enabling people to afford more goods and services, thereby improving
their standard of living.
2.​ Improved Public Services
Governments often collect more tax revenue during periods of growth, which can be invested in public services like healthcare,
education, and infrastructure, further enhancing living standards.
3.​ Reduction in Poverty
Sustained economic growth can reduce poverty by creating jobs and increasing wages.
4.​ Job Creation
Economic growth typically leads to increased demand for goods and services, which can result in more jobs as firms expand to
meet this demand.
5.​ Reduction in Cyclical
During periods of economic expansion, unemployment caused by insufficient demand (cyclical unemployment) usually
decreases as businesses hire more workers.

The Basic Issue: Population Growth and Quality of life

Will developing countries be able to improve levels of living given anticipated population growth? Rapid population growth
places pressure on resources, infrastructure, and social services. In many developing nations, economic development struggles to
keep pace with increasing population size, making it difficult to raise living standards.
How will developing countries deal with the vast increases in their labor forces? A growing labor force can be beneficial if job
opportunities expand accordingly. However, in many cases, economies cannot generate enough employment, leading to high
unemployment and underemployment, particularly among the youth.
How will higher population growth rates affect poverty? The link between high fertility rates and poverty is well-documented.
Larger families often have fewer resources per child, limiting access to education and healthcare. This perpetuates poverty across
generations.
Will developing countries be able to extend the coverage and improve the quality of healthcare and education in the face of
rapid population growth? Increased population places a strain on health and education systems. Governments in developing
nations often struggle to provide adequate services, leading to overcrowded schools and insufficient medical care. High fertility rates
can worsen maternal and child health outcomes due to limited healthcare access.
Is there a relationship between poverty and family size? Research suggests that poorer families tend to have more children, often
due to economic, cultural, or social factors. In many cases, children are viewed as economic assets, contributing to household labor
and providing security in old age. However, large family sizes also limit household savings and investment in education, reinforcing
the cycle of poverty.
How does affluence in the developed world affect the ability of developing countries to provide for their people? The unequal
distribution of global resources means that developed countries, with smaller populations, consume a disproportionate share of the
world’s wealth. This imbalance affects global trade, food distribution, and access to essential resources, further complicating
development efforts in poorer nations.

DEMOGRAPHIC TRANSITION
The phasing-out process of population growth rates from a virtually stagnant growth stage, characterised by high birth rates and
death rates through a rapid-growth stage with high birth rates and low death rates to a stable, low-growth stage in which both birth
and death rates are low

DEMOGRAPHIC TRANSITION MODEL

It is a powerful tool for understanding population change stages. It examines
how birth rates and death rates influence a country's total population over time.

STAGES OF DEMOGRAPHIC TRANSITION

Stage 1: Pre-Industrial
Pre-industrial societies had high death and birth rates, with children contributing to household economies and family size.
Causes included poor diet, sanitation, hygiene, and lack of medical care. This stage was prevalent in agrarian societies with low
economic productivity, life expectancy, large families, primitive agriculture, low urbanization, and literacy. Population was
determined by food supply, and famines directly contributed to mortality rates.
Stage 2: Transitional Stage
The second stage of the demographic transition involves high fertility rates and a rapid reduction in mortality rates.
Improvements in food supply, water supply, sanitation, hygiene, and health facilities contribute to this. However, education levels
remain low, leading to high birth rates. By the end of the second stage, fertility rates remain high, causing rapid population growth.
The age structure of the population changes, with younger generations having larger families. Most developed and underdeveloped
countries are in this explosive stage of demographic transition.
Stage 3: Industrial Stage
In Stage 3, death rates decrease and birth rates decrease due to improved economic conditions, women's status, education, and
social awareness. This decline in birth rates fluctuates across nations and contributes to population stability. Factors contributing to
this decline include rural areas' decline in childhood deaths, urbanization changing traditional values, and increasing literacy and
employment. Fertility decline is also influenced by the availability and awareness of contraceptive technology.
Stage 4: Post-Industrial Stage
The Fourth Stage of population growth is marked by a decline in death and birth rates, leading to stable or slow population
growth. This is due to factors like disease reduction and food production, while birth rates decrease due to increased awareness and
women's work participation. Countries with a total fertility rate below 2.5 in 2015 include Argentina, Bahrain, Bangladesh, Bhutan,
El Salvador, and Venezuela.
Stage 5:
The original Demographic Transition model has four stages, later an additional fifth stage has been proposed. Some designate it
as a stage of rising population whereas others think it as a stage of less fertility rate and negative growth rate. At this stage, the
population has become highly industrialized and urbanized with higher technological development. This stage is evident in West
Europe, Australia, New Zealand, Japan, Singapore etc.