Urbanisation's different strokes

The world is rapidly urbanising. Given the projected population growth rates for the next few decades, urbanisation is only going to accelerate. In the 1960s, around 33 per cent of the global population lived in urban areas, which grew to 55 per cent by 2020. However, the global figures tend not to reveal the distinctive regional trajectories of urbanisation. North America is the most urbanised region with 82 per cent of its population living in urban areas. In contrast, by 2020, Asia had an urbanisation rate of 50 per cent, meaning half of its population resided in cities, while it was only 43 per cent for Africa.

These different trajectories have emerged so distinctively. In the Western world, urbanisation accelerated after the Industrial Revolution, which triggered the flow of people from rural to urban areas. However, urbanisation is more of a 20th hallmark for the rest of the world. Additionally, if we compare the historical trends between North America, Asia and Africa, the disparity between the developed and developing regions becomes apparent. For instance, in 1950, approximately 64 per cent of the population was living in urban areas in North America. For Asia, it was nearly 17.5 per cent and 14 per cent for Africa.

Variations in the pace of urbanisation are evident when we draw a comparison between the more developed and the less developed regions. According to the “World Urbanisation Prospects: 2018 Revision” (released by the United Nations), in 1950, 29.8 per cent of the population in more developed regions lived in cities, compared to only 20.3 per cent in the less developed areas (excluding China). If we include China in the less developed regions, the number jumps to around 54 per cent. In fact, in 1950, China accounted for nearly 11.8 per cent of the urbanised population, with its special administrative regions (Hong Kong and Macau) having more than 80 per cent of its residents living in cities. By 2020, China had an urban proportion of about 61 per cent, with its special administrative regions showing 100 per cent urbanisation. The urbanisation “epoch” occurred during the period of the Great Leap Forward between 1958 and 1961 and then post-1978 as China opened up.

The waves of urbanisation have been uneven around the world and are intrinsically tied to the level of development and industrialisation in a country. This then explains the presence of sub-regional and inter-regional disparities as well. For instance, among the Asian sub-regions, Central Asia accounted for the highest percentage of urban proportion (approximately 32.7 per cent). By 2020, however, one could observe a relatively slower pace of urbanisation (about 48 per cent) in the Asian region.  East Asia now has an urban proportion of nearly 64.8 per cent, but this region also includes more developed countries like China and Japan. Closer to home in South Asia, 16 per cent of the population was living in urban areas in 1950, which increased to about 36.6 per cent (2020). In 1950, the rate of urbanisation in India (17 per cent) was more than the South Asian average and continued so throughout the 1970s.

Additionally, regional diversities highlight the different pace of urbanisation between countries. For instance, keeping 1950 as a starting point, India began with a higher rate of urbanisation than Indonesia (12.4 per cent). However, by 2020, Indonesia had an urban proportion of around 56.6 per cent, much higher than India’s 34.9 per cent.  After 1982, Indonesia’s pace of urbanisation exceeded India’s with a rise of 1-2 percentage points every year. Indonesia’s urban story, in particular, has been significant. According to the World Bank, the urban population had grown by 4.1 per cent yearly by 2016.

 There are several reasons for the variations, which range from different rates of natural population growth in rural and urban areas, rural-to-urban migration, international migration, and the growth of urban settlements. Natural population growth and uneven distribution across regions are significant causes of the regional variations. Administrative changes like reclassification or changing the definition of what constitutes an urban area also impacts the level of urbanisation. The urbanisation rate reaches saturation at very high levels and then typically slows down, which can be seen in the case of developed countries. Given that India, China and Nigeria are seen to be contributing at least 33 per cent to the global urban population by 2050, it is imperative to closely watch the urbanisation trajectory of these developing countries in the next few years. Moreover, economic change and spatial planning, which includes housing, infrastructure, and service delivery, are strongly related to the extent and pace of urbanisation as well as the underlying demographic dynamics. These variations, however, should not mask the fact that the global trajectory of urbanisation has been encouraging, with almost 80 per cent of global gross domestic product being generated in cities, according to the World Bank’s feature on urban development.

The correlation between the transformation from a rural to an urban economy and an increase in the urban proportion is expected and evident, as in the case of Indonesia. This comes along with higher development, shared prosperity and welfare, as well as a rise in formal employment and labour productivity. At the same time, the focus cannot be solely on triggering urbanisation. Equally important is equipping our cities with infrastructure facilities to cater to the needs of a rising population. Most importantly, to narrow the rural-urban disparity and the disparity among cities and megacities, equitable development should be sought to avoid the concentration of population in only a few cities. Rather, smaller cities should be provided with an impetus to attract investment and opportunities, alongside increased investment in infrastructural development and a greater focus on ease of living for its people.

The writers are, respectively, chair, Institute for Competitiveness, India and visiting lecturer, Stanford University; and chairman, Economic Advisory Council to Prime Minister of India. @kautiliya and @bibekdebroy