IMF Survey: World Reaches Urban Tipping Point

IMF News, October 4, 2007

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Within the next year, for the first time in history, more than half of the world's population will be living in urban rather than rural areas, according to recent UN projections.
The economic implications of this urban revolution are examined in the September issue of the IMF's quarterly magazine Finance & Development.
Economists generally agree that urbanization, "if handled well, holds great promise for higher growth and a better quality of life." Conversely, "if handled poorly, urbanization could not only impede development but also give rise to slums and other social problems, such as crime and violent conflict."

"Some 75 percent of the city dwellers will live in developing countries—a figure that is expected to rise to 80 percent by 2030."
By 2030, "Africa, Asia, and Latin America are expected to account for more than 80 percent of the world's urban population."
Megacities (more than 10 million people) are increasing in number but "are home to only about 5 percent of the world's population."
Of the top 20 megacities, the greatest number are in Asia, with Latin America a distant second.

In 2007, the UN reports "more than one billion people are living in slums—that's one out of every three urban dwellers worldwide, and more than double that in sub-Saharan Africa."
On poverty distribution: "75 percent of the developing world's poor still live in rural areas, although there are some marked regional variations."
The share of the poor living in urban areas is rising, and "more rapidly than for the population as a whole."
Population urbanization has "helped reduce overall poverty—however, the process of urbanization has affected rural poverty more than urban poverty."

Megacities "have megaproblems when it comes to governance, funding, and the provision of services."
Policy approach highlighted: "Both national governments and megacities can secure potential benefits by exploring the devolution of clearly defined responsibilities and revenue-raising capacity that provide incentives for good governance."

The Urban Revolution — David E. Bloom and Tarun Khanna: "The year 2008 marks a watershed in the complex and ongoing urban revolution. For the first time, more than 50 percent of the world's people will live in urban areas. Rapid urbanization may prove a blessing, provided the world takes notice and plans accordingly."
Urban Poverty — Martin Ravallion: "The poor are gravitating to towns and cities, but maybe not quickly enough. A faster pace of urbanization could induce more rapid poverty reduction. Development policymakers should facilitate this process, not hinder it."
Big or Too Big? — Ehtisham Ahmad: discusses devolution of responsibilities and revenue-raising capacity for megacities.
What Is the Biggest Challenge in Managing Large Cities? — Matthew Maury, Kishore Mahbubani, and Ramesh Ramanathan and Swati Ramanathan: "Three points of view on different ways to manage the expansion of cities well."
Chart feature — Patrick Salyer and David E. Bloom: "A chart-based look at the growth of cities around the world."

More than half of the world's population will live in urban areas within the next year.
75 percent of city dwellers live in developing countries; expected to rise to 80 percent by 2030.
More than one billion people living in slums in 2007 — "one out of every three urban dwellers worldwide."
Megacities host "about 5 percent of the world's population."
75 percent of the developing world's poor still live in rural areas.

Facilitate well-managed urbanization to capture "higher growth" and "better quality of life."
Address slum formation, crime, and violent conflict risks through proactive urban planning.
Encourage devolution of "clearly defined responsibilities and revenue-raising capacity" to improve governance and service provision in megacities.
Development policymakers should "facilitate" urbanization processes to accelerate poverty reduction rather than hinder them.

Source: IMF Survey: World Reaches Urban Tipping Point, IMF Survey online, October 4, 2007.