EH 483 Week 16 - Functions of Cities

Below are some key excerpts from Chapter Eight of Todaro's "Economic Development" text. Some bullet points are direct quotations from Tordo so if used, do cite accordingly.

• Chapter is devoted to one of the most perplexing dilemmas of the development process: the phenomenon of massive and historically unprecedented movements of people from the rural countryside to the burgeoning cities of Africa, Asia and Latin America - and what is clear from all of this is that population growth will be most dramatic in the major cities of the developing world
• Statistics show that rural migrants constitute anywhere from 35-60% of recorded urban population growth
• According to UN estimates, world’s urban population had reached 2.4 billion by 1990 with considerable increases forthcoming – for cities in Asian nations, per annum growth is projected to be in excess of 5% and in African cities 7%
• Cities, more generally, are known to offer the cost-reducing advantages of agglomeration economies and economies of scale and proximity as well as numerous economic and social positive externalities, social costs of a progressive overloading of housing and social services, not to mention increased crime, pollution and congestion, tend gradually to outweigh historical urban advantages
• Author worries about how these cities will cope – economically, environmentally and politically with such large urban populations
• Until recently, rural-urban migration was viewed favourably by economists and development proponents; internal migration was thought to be a process in which surplus labour was gradually withdrawn from the rural sector to provide needed support for urban industrial growth;Now clear from the LDC experience that rates of rural-urban migration continue to exceed rates of urban job creation and to surpass greatly the absorption capacity of both industry and urban social services
• Begins to discuss the informal sector which is an unorganized, unregulated and mostly legal but unregistered sector in urban agglomerations; Studies reveal that the share of the urban labour force engaged in informal-sector activities ranges from 20-70% - with unprecedented growth of urban population in developing countries, more attention is being devoted to the role of the informal sector in serving as a panacea for the growing unemployment problem caused by failure of rural and urban formal sectors to absorb labour force additions
• Develops model that aims to substitute for the inadequate Lewis two-sector model. Torod's assumptions are: that migration is stimulated by rational economic considerations of relative benefits and costs; decision to migrate depends on expected rather than actual urban-rural wage differentials; probability of obtaining an urban job is directly related to urban employment rate and thus inversely related to the urban unemployment rate
• Author has five policy implications derived from his analysis – imbalances in urban-rural employment opportunities must be reduced; urban job creation is an insufficient solution for urban unemployment problem; Indiscriminate educational expansion will lead to further migration and unemployment; wage subsidies and traditional scarcity factor pricing can be counterproductive; and programs of integrated rural development should be encouraged
• Concludes with summary of what appears to be a stylised consensus of most economists on the shape of migration and employment strategy, which in turn has an impact on the functions of cities. These conclusions are: Creating an appropriate rural-urban economic balance – balance between rural and urban economic opportunities appears to be indispensable to ameliorating both urban and rural unemployment problems and to slowing the pace of rural-urban migration; expansion of small-scale labour-intensive industries; elimination of factor-price distortions such as capital subsidies; choosing appropriate labour-intensive technologies of production – Third World nations as it stands today depend on imported equipment and machinery; modifying direct linkage between education and employment; Reducing population growth through reductions in absolute poverty and inequality along with expanded provision of family planning and rural health services