The positive association between urbanization and per capita income is one of
the most obvious and striking “stylized facts” of the development process.
Generally, the more developed the country, measured by per capita income,
the greater the share of population living in urban areas. Figure 7.1 shows
urbanization versus GNI per capita; the highest-income countries, such as
Denmark, are also among the most urbanized, while the very poorest countries,
such as Rwanda, are among the least urbanized. At the same time, while
individual countries become more urbanized as they develop, today’s poorest
countries are far more urbanized than today’s developed countries were when
they were at a comparable level of development, as measured by income per
capita, and on average developing countries are urbanizing at a faster rate.
Figure 7.2 shows urbanization over time and across income levels over the
quarter century from 1970 to 1995. Each line segment represents the trajectory of
one country, starting from the solid dots, which represent the 1970 income and
urbanization level for a given country and ending at the end of the line segments
(marked by a diamond), which represent the corresponding 1995 income and urbanization
level for the same country. Although the World Bank caption to the
figure stated that “urbanization is closely associated with economic growth,” the
figure may also be interpreted as showing that urbanization is occurring everywhere,
at high and low levels of income and whether growth is positive or negative.
Even when the lines point to the left, indicating shrinking incomes per
capita over the period, they still generally point upward, indicating that urbanization
continued. In short, urbanization is happening everywhere in the world,
although at differing rates. So we need to consider urbanization carefully—is it
only correlated with economic development, or is causation also at work?
Indeed, one of the most significant of all modern demographic phenomena
is the rapid growth of cities in developing countries. In 1950, some 275 million