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Adam Smith was enthusiastic about cities as a cause of economic development: "Cities, instead of being the effect, have been the cause and occasion of the improvement and cultivation of the country" (Wealth of Nations). More recently, theorists and researchers also show that cities cause increased productivity - in general, the bigger the city, the more productive the workers and the higher their wages.

Nonetheless, little information is available about low-income cities. Most of the data about what goes on inside the city and which have been used to test the predictions of the literature describe high-income contexts. There are however major questions about how transferable the obtained knowledge is to middle- and low-income settings.

With funding from the World Bank and DfID, Vernon Henderson of the LSE, and Paul Collier and Tony Venables of Oxford University have set up a 3-year joint programme on Urbanisation in Developing Countries. The programme will examine the patterns, causes, consequences, and policy implications of the spatial development of cities in developing countries. Half of the projects will be devoted to urbanisation development in China, India and Brazil, whilst the other half will focus on African cities, which face a distinctive starting point and which are predicted to triple in size by 2050.

The programme will:
  • Build a credible database to describe the speed, magnitude and spatial form of urban development. The data will combine satellite imagery with other sources of georeferenced data (from maps, infrastructure systems, and population and economic census, as well as georeferenced household and economic surveys) to build a picture of spatial transformation at the country and city levels. The data set will look both across cities and within certain cities;
  • Examine the determinants and consequences of how urbanisation has taken place and how urban form has evolved to its present shape;
  • Identify the effects of policy changes. Key points to examine include policy choices on the distribution of infrastructure investments, public services and institutional reforms over space and time.
In this framework, key research questions include:
  • Why have some cities grown faster than others?
  • What are the effects of geography, natural resources, and economic governance on urbanisation and city growth?
  • What difference does connectivity between cities make?
  • What is the impact on climate change of the speed of urbanization and industrialization?
  • Why have some cities typically developed in a low-density form? Does this matter for economic performance?
  • Which infrastructural policy choices (e.g., transport, utilities, access to credit, building and land regulations) can make the urban environment productive for firms?
Only by assembling relevant data and analysing them will it be possible to address these issues. We will, in addition, address the particular issues facing policy for African urbanisation. Africa is distinctive in both its starting point - it is characterised by a very dispersed, low-density rural population with low levels of industrialization. Similarly, it vastly differs in terms of its opportunities - with a natural resource-based growth for the next decade, and a possible break into global manufacturing in a few locations. Questions to be addressed in this context include:
  • Why is the lived environment in African cities so poor?
  • Why is factor productivity in African cities low?
  • Why is the provision of infrastructure poor?
  • How do changes in infrastructure and other public policies influence residential and commercial investment choices?

Related Publications

Location, Search Costs and Youth Unemployment: Experimental Evidence from Transport Subsidies in Addis Ababa
Simon Franklin
May 2016 | Paper No' SERCDP0199

The Global Spatial Distribution of Economic Activity: Nature, History and the Role of Trade
J. Vernon Henderson, Tim Squires, Adam Storeygard and David Weil
May 2016 | Paper No' SERCDP0198

Enabled to Work: The Impact of Government Housing on Slum Dwellers in South Africa
Simon Franklin
May 2016 | Paper No' SERCDP0197

Building the City: Sunk Capital, Sequencing and Institutional Frictions
J. Vernon Henderson, Tanner Regan and Anthony J. Venables
April 2016 | Paper No' SERCDP0196

Take What You Can: Property Rights, Contestability and Conflict
Thiemo Fetzer and Samuel Marden
April 2016 | Paper No' SERCDP0194

Business as Unusual. An Explanation of the Increase of Private Economic Activity in High-Conflict Areas in Afghanistan
Tommaso Ciarli, Chiara Kofol and Carlo Menon
July 2015 | Paper No' SERCDP0182