Urbanization and Rural-Urban Migration (PDF)

BM1914 URBANIZATION AND RURAL-URBAN MIGRATION: THEORY AND POLICY Urbanization: Trends and Living Conditions Since 2009, the world has become largely urbanized. The developing countries are projected to become commonly urban before 2020, while the least developed countries are expect...

BM1914 URBANIZATION AND RURAL-URBAN MIGRATION: THEORY AND POLICY Urbanization: Trends and Living Conditions Since 2009, the world has become largely urbanized. The developing countries are projected to become commonly urban before 2020, while the least developed countries are expected to reach this milestone after 2050. In 2017, 4.1 billion people were living in urban areas of developed, developing, and least- developed countries. This means over half of the world population (55%) live in urban settings (Ritchie & Roser, 2019). Most urban growth has occurred in cities of Asia and Africa. In 2012, the United Nations (UN) showed that the urban population of Africa will grow from 414 million in 2012 to over 1.2 billion by 2050 and that the urban population of Asia will grow from 1.9 billion to 3.3 billion. Thus, taken together, the United Nations forecast that Asia and Africa will account for some 86% of the global urban population increase in the given period (Smith & Todaro, 2015). In fact, there will be so much rural-to-urban migration in Asia that its rural population will significantly decline in this period, as presented in Figure 1. Figure 1. Changes in urban and rural population by major areas between 2011 and 2050 (in millions) Source: Economic Development (12th ed.), 2015, p. 331 Urbanization rates increase whenever urban population growth exceeds rural population growth. The positive association between urbanization and per capita/individual income is one of the most obvious indicators of the development process. Generally, the more developed the country is, as measured by per capita income, the greater is the share of population living in urban areas. Some of the highest-income countries, such as Japan, the United States, and Europe, are also among the most urbanized, while the very poorest countries, such as Burundi, Malawi, and Niger, are among the least urbanized (World Population Review, 2020). Urbanization is proceeding rapidly. According to UN projections, there will be almost 5 billion urban dwellers by 2030, nearly five (5)-eighths of projected world population for the said year (Smith & Todaro, 2015). In recent decades, urbanization has continued in nearly all developing countries, even those that have experienced minimal industrialization. The rapid growth of cities in developing countries can be considered as a significant demographic phenomenon in world history. 07 Handout 1 *Property of STI  [email protected] Page 1 of 5  BM1914 In 1950, approximately 275 million people were living in cities in the developing world, 38% of the 724 million total urban 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. The population growth in cities of over 5 million in population is more rapid than the growth of smaller cities (under 500,000) in the developing world. Moreover, the developing world is also coming to dominate the world’s largest cities, including megacities, with over 10 million inhabitants (Smith & Todaro, 2015). Figure 2 provides a map locating some of the megacities, the largest urban clusters in the world containing a population of at least 10 million people. Figure 2. Selected megacities: Cities with 10 million or more inhabitants Source: Economic development (12th ed.), 2015. p. 334 As the above figure shows, in 1970, there were only two (2) megacities: New York, USA and Tokyo, Japan. As the year passes by, more and more cities are being added until 2011 when Manila, Philippines, was added to the list. By 2025, it is projected that 30 out of the world’s 37 megacities (more than 80%) will be in developing countries (Smith & Todaro, 2015). Along with rampant urbanization and urban bias in development strategies is the growth of huge slums and shantytowns or squatter areas. Urban bias is the 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. Although population growth and accelerated rural–urban migration are primarily responsible for the rage of urban shantytowns, part of the blame rests with the government. Their misguided urban-planning policies and outmoded building codes often mean that a majority of new urban housing is “illegal.” For example, colonial-era building codes in Nairobi, Kenya, made it impossible to build a “legal” house for less than $3,500 or Php 175,000. The law has also required every dwelling to be accessible by car. As a result, two-thirds of Nairobi’s land have been occupied by 10% of the population, while many slum dwellings cannot legally be improved. The momentous urban population growth in Nairobi, Kenya made it even more difficult to attain formal housing in the said region that more than half of the population in Nairobi lives in informal settlements (Abhas, Barenstein, Phelps, Pittet, & Sena, 2010). 07 Handout 1 *Property of STI  [email protected] Page 2 of 5  BM1914 Similarly, in Manila, Philippines, a large majority of the population has historically been too poor to be able to buy or rent an officially “legal” house. A widely held belief in some developing countries is that governments have intentionally sought to make the lives of new migrants as miserable as possible, hoping this will be an effective deterrent to prospective migrants, but when people come to cities anyway, slums are the inevitable result. In support of these claims, Philippine Presidential Decree 772, promulgated in 1975, criminalized the act of squatting or occupying illegal urban areas. The said decree also classified individuals or groups who reside in lands without the expressed consent of the landowner and who have sufficient income for access to legitimate housing as professional squatters. The term also applies to individuals who sold, leased, or transferred previously awarded lots/housing units and choose to reside in illegal settlements (Ragragio, n.d.). Often, however, even the government’s best efforts to neglect, discriminate against, or even destroy slums are not enough to cancel out the many other distortions in disregarded, economically stagnant, or socially oppressive rural areas (Smith & Todaro, 2015). The Urban Giantism Problem Urban giantism is a condition wherein first cities are congested or overpopulated as a result of urban bias and other capital incentives of living in larger cities. These are the following causes of urban giantism according to Smith and Todaro (2015): First-City Bias. The country’s largest or first (“first-place”) town receives a disproportionately large share of public investment and incentives in relation to the country’s second-largest city and other smaller cities. As a result, the first city receives a disproportionately large share of population and economic activity. Hub-and-Spoke Transportation System. The country’s airports are mostly located in major cities of developing nations. As a result, more people desire to live in urban areas in order to avoid a huge amount of transport costs and get closer to major airports that offer international flights. Import Substitution Strategy. Most firms desire to pursue their business in large cities since political economies are often located in these areas. The high level of protection from political entities provides lesser international trade costs for firms. Moreover, it becomes advantageous for firms to be located where they have easy access to government officials to execute political favors that sometimes give companies special favors for market price or other business dealings. In addition, major cities already have a large population, so firms wish to set up operations in the city where most consumers already live to achieve economies of scale. Consequently, this attracts more people to the region in search of jobs. Migration and Development Rates of rural–urban migration in developing countries have exceeded rates of urban job creation and thus have greatly surpassed the capacity of both industry and urban social services. Migration worsens rural–urban structural imbalances in two (2) direct ways. First, on the supply side, internal migration disproportionately increases the growth rate of urban job seekers relative to urban population growth, which itself is at historically unprecedented levels because of the high proportion of well-educated young people in the migrant system. Their presence tends to swell the urban labor supply while depleting the rural countryside of valuable human capital. Second, on the demand side, urban job creation is generally more difficult and costlier to accomplish than rural job creation because of the need for substantial complementary resource inputs for most jobs in the industrial sector. Moreover, the pressures of rising urban wages and compulsory employee fringe benefits in combination with the unavailability of appropriate, more labor-intensive production technologies mean that a rising share of modern-sector output growth is accounted for by increases in labor productivity. Together, this rapid supply increase and lagging demand growth tend to convert a short-run problem of resource imbalances into a long-run situation of chronic urban surplus labor (Smith & Todaro, 2015). 07 Handout 1 *Property of STI  [email protected] Page 3 of 5  BM1914 But the impact of migration on the development process is much more drastic than its effects on urban unemployment and underemployment. Unemployment refers to the workforce who are not currently employed but are actively looking for a job, whereas underemployment accounts for the workers who are forced to accept jobs below their qualifications. This means that underemployed individuals are those who cannot exercise their full skills and capabilities (Chen, 2019). Nations must, therefore, recognize that migration in excess of job opportunities is a major contributor to underdevelopment. Understanding the causes, determinants, and consequences of internal rural-urban labor migration is thus central to understanding the nature of the development process and formulating policies that influence urbanization in socially desirable ways. A simple yet crucial step in stressing the centrality of the migration phenomenon is to recognize that any economic and social policy that affects rural and urban real incomes will directly or indirectly influence the migration process. This process will, in turn, tend to alter the pattern of sectoral and geographic economic activity, income distribution, and even population growth. Because all economic policies have direct and indirect effects on the level and growth of urban or rural incomes, or both, they will tend to influence the nature and magnitude of the migration stream (Smith & Todaro, 2015). Some policies may have a more direct and immediate impact, such as wages and income policies and employment promotion programs. There are other policies that, though less obvious, may, in the long run, be no less important. Included among these policies, for example, would be commodity pricing policies; credit allocation; taxation; export promotion; commercial policies; the geographic distribution of social services; the nature of public investment programs; attitudes toward private foreign investors; the organization of population and family planning programs; the structure, content, and orientation of the educational system; the functioning of labor markets; and the nature of public policies toward international technology transfer and the location of new industries (Smith & Todaro, 2015). A Comprehensive Urbanization, Migration, and Employment Strategy The following policies can be adopted to solve problems related to urban congestion (Smith & Todaro, 2015): 1. Creating a rural-urban economic balance. A more appropriate balance between rural and urban economic opportunities appears to solve both urban and rural unemployment problems and slow down the pace of excessive rural–urban migration. The main thrust of this activity should be in the integrated development of the rural sector, the spread of rural nonfarm employment opportunities, improved credit access, better agricultural training, the reorientation of social investments toward rural areas, improving rural infrastructure, and addressing shortcomings of rural institutions (including corruption and discrimination), the presence of which has the effect of raising the cost of delaying out-migration. 2. Expansion of small-scale, labor-intensive industries. The composition of output has obvious effects on the magnitude of employment opportunities because some products (often basic consumer goods) require more labor per unit of output than others. Expansion of these mostly small-scale and labor-intensive industries in both urban and rural areas can be accomplished in two (2) ways: directly, through government investment and incentives and improved access to credit, particularly for activities in the urban informal sector, and indirectly, through income redistribution to the rural poor, whose structure of consumer demand is both less import-intensive and more labor-intensive than that of the rich. Under the right conditions, such enterprises can agglomerate as industrial districts in ways that can generate exports. 3. Eliminating factor price distortions. Factor price distortion are deviations from quoted prices of commodities. This can be corrected by eliminating various capital subsidies and restricting the growth of urban wages through market-based pricing. Market-based pricing is the act of setting 07 Handout 1 *Property of STI  [email protected] Page 4 of 5  BM1914 standard fees for some goods and services. This would increase employment opportunities and make better use of scarce capital resources. 4. Choosing appropriate labor-intensive technologies. The main factor 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 machinery and equipment from the developed countries. Domestic and international efforts can help reduce this dependence by developing technological research in developing countries. Such efforts might first be linked to the development of small-scale, labor-intensive rural and urban enterprises. They could focus on developing low-cost, labor-intensive methods of meeting rural infrastructure needs, including roads, irrigation and drainage systems, and essential health and educational services. This is an area where scientific and technological assistance from the developed countries could prove extremely helpful. 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. A way to moderate the excessive demand for additional years of schooling (which, in reality, is a demand for modern-sector jobs) would be for governments, often the largest employers, to base their hiring practices and wage structures on other criteria. Moreover, the creation of attractive economic opportunities in rural areas would make it easier to redirect educational systems toward the needs of rural development. 6. Decentralizing authority to cities and neighborhoods. Experience shows that decentralization 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. Local officials have greater information about evolving local conditions. When officials are held accountable for local fiscal performance and know they must answer to recipients of the services they provide, they also have greater incentives to carry out their responsibilities effectively. Decentralization, with increased authority of cities and regions, has been a major international trend in the organization of government. 7. Leveraging untapped opportunities for urban dynamism. With strong, pro-poor rural development policies in place, many developing countries in Africa, Asia, and Latin America can still make gains in harnessing the growth potential of developing-country cities, with ongoing attention to prepare for its possible migration implications. 8. Addressing the desperate poverty needs of the poor. As poor rural residents continue to migrate to urban areas, there is a growing phenomenon of the “urbanization of global poverty.” For poor residents in slum communities, basic protection is needed. They face disease and death from unsanitary conditions and increasing vulnerability to severe weather events and other disasters. These citizens urgently need a basic safety net, let alone an improvement in the actively hostile policies that have prevailed in many developing nations and regions by denying property rights and other forms of discrimination. A change in basic policies can lead to large improvements in living conditions in the slums. References Abhas, J., Barenstein, J., Phelps, P., Pittet, D., & Sena, S. (2010). Safer homes, stronger communities: A handbook for reconstructing after natural disasters. United States: World Bank Publications Chen, J. (2019). Underemployment. Retrieved on January 8, 2019, from https://www.investopedia.com/terms/u/underemployment.asp. Ragragio, J. (n.d.). The case of Metro Manila Philippines. Retrieved on February 4, 2020, from https://www.ucl.ac.uk/dpu-projects/Global_Report/pdfs/Manila.pdf Ritchie, H. & Roser, M. (2019). Urbanization. Retrieved on February 4, 2020, from https://ourworldindata.org/urbanization#urban-populations-tend-to-have-higher-living- standards Smith, S. & Todaro, M. (2015). Economic development (12th ed.). United Kingdom: Pearson Education, Inc. World Population Review. (2020). Poorest countries in the world 2020. Retrieved on February 4, 2020, from http://worldpopulationreview.com/countries/poorest-countries-in- the-world/ 07 Handout 1 *Property of STI  [email protected] Page 5 of 5