Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

Typical street scene in Santa Ana, El Salvador. (Photo: iStock)

IMF Survey: World Reaches Urban Tipping Point

October 4, 2007

  • Soon for first time ever more than half world's population will live in cities
  • Well-managed urbanization promises higher growth, better quality of life
  • However, more than one-third of global city dwellers live in slums

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.

World Reaches Urban Tipping Point

Downtown Tokyo, Japan—world's largest megacity: well-managed urbanization promises better quality of life (IMF photo)


Some 75 percent of the city dwellers will live in developing countries—a figure that is expected to rise to 80 percent by 2030.

The economic implications of this urban revolution form one of the issues 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. But the flip side is also true: 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.

In 2007, the UN reports, the world hit another record: 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.

Poverty an urban phenomenon?

Is poverty becoming an urban phenomenon in the developing world? One article reports that 75 percent of the developing world's poor still live in rural areas, although there are some marked regional variations. But the share of the poor living in urban areas is rising, and more rapidly than for the population as a whole. Moreover, by facilitating overall economic growth, population urbanization has helped reduce overall poverty—however, the process of urbanization has affected rural poverty more than urban poverty.

As part of this urban revolution, more megacities (more than 10 million people) are developing—although, despite their size, they 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. And, perhaps not surprisingly, as another article points out, megacities have megaproblems when it comes to governance, funding, and the provision of services.

Read the group of articles:

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

Megacities create special issues of governance, funding, and provision of services. 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.

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.

The March of the Cities
Patrick Salyer and David E. Bloom

A chart-based look at the growth of cities around the world. By 2030, Africa, Asia, and Latin America are expected to account for more than 80 percent of the world's urban population.