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Impacts of Urbanisation on Economy - 2011


1. 2. 3. 4. 5.


6. 7.


Impacts of Urbanisation on Economy - 2011

Urbanization is a defining phenomenon of 21st century. The developing world is at the center of demographic & economic transformation. Urbanization is an index of transformation from traditional rural economies to modern industrial one. It is progressive concentration of population in urban unit. Urbanization, simply defined, as a movement of people from a rural to an urban areas, with population growth equating to urban migration. Urbanization is closely linked to modernization, industrialization, and the sociological process of rationalization. Urbanization can describe a specific condition at a set time, i.e. the proportion of total population or area in cities or towns, or the term can describe the increase of this proportion over time. So the term urbanization can represent the level of urban relative to overall population, or it can represent the rate at which the urban proportion is increasing. As more and more people leave villages and farms to live in cities, urban growth results. These rapid rural-urban migration is very common in developing countries. About 400,000 sq. kilometers will be constructed for urban uses between 2000-2030 ,doubling the worlds built up urban area. Nearly two billion new urban residents are expected in the next 20 years. Doubling the urban populations of South Asia and Africa. UN World Urbanization Prospects report for global urban population 2005 showing rapid urbanisation growth as follows-

220 Million Year 1900 732 Million 3.2 Billion 4.9 Billion Year 1950 Year 2005 Year 2030

13% 29 % 49 % 60 %

Impacts of Urbanisation on Economy - 2011


The purpose of the report is y To study the various factors creating rapid urbanisation globally. y To indicate various positive Urbanization on economy. y To study how to process.

and negative

Impacts of

minimize these Impacts and also Urbanization

Impacts of Urbanisation on Economy - 2011

y To study how to improve rural economy& growth.

Many villagers and small town dwellers want a living in big cities. With some expectations, they make a movement from villages to big cities. This migration from rural areas to big cities is called urbanization. Living in cities permits individuals and families to take advantage of the opportunities of proximity, diversity, and marketplace competition. People move into cities to seek economic opportunities.

Most industries and educational institution are located in cities whereas there are limited opportunities within rural contributes to migration to cities. In urban area better service available of sufficient electricity, potable water, medical care, better sanitation and improved food supplies, which reduce death rates and cause population to grow. After rural migrants coming to urban area they spend their lives in
insecure, poorly paid jobs in spite, they participate in economic growth, and adjust to economic change, through urban labour markets. They grow as urban poor slums & their life is worse than a village in most cases.

areas; this further

Impacts of Urbanisation on Economy - 2011

Traffic jams on roads

Industrial pollution

High-rises & slums

Impacts of Urbanisation on Economy - 2011



Urbanization itself has punctuated economic development. y What happens to surrounding rural areas when a city grows? y Does the areas population receive economic benefit from it and up to what extent Six agents effecting urbanization on rural economy 1 Backward linkages
Urban Rural

Transport production of goods, income

Higher income ,more consumption Market, advanced technology 2 Rural non-farm employment

The increase demands of urban finished goods tends to provide non-agricultural production in sub-urban areas i.e. rural areas nearer to urban areas,hence they do not have to depend only on agricultural economy.People may commute to cities for small jobs & trades. These process boost ups the transportation & marketing.  Remittances The urban migrated worker sends share of his income to his family in rural area, where they do not have to depend now only on farming income.  Agricultural production: due to migration, reduction in rural labour resulting in less agricultural production.

Impacts of Urbanisation on Economy - 2011

 Rural land prices: The growth of cities may increase agricultural land prices in nearby rural areas due to the higher demand for agricultural land for residential purposes for expansion. This may generate increased income for land/farm owners.  Agricultural products: Due to unavailability of proper transport and technology such as cold storages in rural areas, they may have to sell the goods at lowest profits in nearby towns. Economic Aspects: Economic development refers to progress toward a communitys economic goals such as increased employment, income, productivity, property values, and tax revenues. y Economic development of any country hinges on the efficient employment of factors of production such as labour, land, capital and organization. There is commercialization of production with monetization of economy. y The people must have the required ability, experience and

knowledge to make the best use of the resources & facilities that are made available. y The technology plays very important role when appropriate social conditions are present. y Transportation planning decision also affect economic development by influencing the connections between resources, workers,

businesses and customers; by influencing consumer expenditures; and by affecting land use development location and intensity.

Impacts of Urbanisation on Economy - 2011

World Systems Analysis

There is a Global Economy which all countries are a part of. The global economy benefits the rich at the expense of the poor. The Global Economy is divided into the Core, Semi Periphery and Periphery. World Systems Analysis theorists such as Immanuel Wallerstein argue that the development of the Core is a result of its exploitation of the Periphery. Core Initially based on comparative advantages (resource and location), develops from acquired advantages (agglomeration, increased tax revenue, increased public spending, education and health care, skilled labour, improvements in infrastructure). Periphery Inaccessible, under populated, poor resources. Downward transitional area could be seen as the periphery suffering from backwash effects of development in the Core.

Impacts of Urbanisation on Economy - 2011

John Friedmanns Stages of Growth

Diagram gives a more detailed explanation of periphery and highlights that spatial inequalities change over time. Stage 1 No urban hierarchy. Stage 2 Primate city. Explains that along with core peripheral sub-urban centres should be developed simultaneously. Stage 3 Regional sub-centres Core & peripheral development goes hand in hand supporting each other. Stage 4 Regional inequalities are reduced in a fully integrated urban system Loaded & exploitation of central core system is reduced & hence full growth with developed regional sub-urban centre is achieved.

Impacts of Urbanisation on Economy - 2011

Urbanization facts of INDIA Report by World Bank

3 out of world's 21 mega cities: - Mumbai (19 mill); Delhi (15 mill), Kolkata (14mill).

Large Cities:

23 in 1991; 40 in 2001

Urban Pop.:

28% of 1,030 mill in 2002.

Estimated Urban Pop. by 2017: -

500 million

% of Urban Residents who are Poor:

About 25%

Slum Population:

About 41 million in 2001.

Estimated Slum Pop. by 2017:

69 million.

In the next 20-25 years, Indias urbanization level is expected to rise from the present 30% to 40- 50%, with over 60 cities of 1 million plus population contributing about 70% of Indias GDP.

Indias growing cities and towns face major challenges in creating adequate infrastructure including transportation, water, solid waste, and power sectors.


Impacts of Urbanisation on Economy - 2011


Urbanisation brings with it several consequences- both adverse and beneficial. They impact on social and environmental areas. 5.1 Positive Impacts of urbanization on economy: a) INDUSTRIALISATION: For economic development of the country industrial play important role as the industries result in employment of the people and economic activity. The more
industrialization matured, the more opportunities were created for work and investment, and this brought more people to cities as consumers and as workers.

b) EMPLOYMENT OPPERTUNITIES: Due to industrialization there are more job opportunities in urban areas as different industries & corporate sectors expands & they need labours to run the machines. c) NATIONAL GROWTH: As the urban area grows, in all sectors, fields, the growth of city results in state as well as national economic growth at global level . d) APPLICATION OF TECHNOLOGY: Due to higher market growth & competitions there are new research & advancement in technology day by day, with growing competitions at global level.
In India, software development and related information-

communication services is the leading sector for economic growth. This new growth sector, which has grown more rapidly and become internationally more competitive than any of the countrys traditional industrial sectors.


Impacts of Urbanisation on Economy - 2011


STANDARD OF LIFE: The family structure changes with

urbanisation. In urban areas nuclear family, consisting of only of parents and their growing children, predominates. Families and children reaching adulthood are more mobile and tend to relocate to where jobs exist. Due to small families they tend to fulfill all luxuries of life, hence consumption. f) INFRASTRUCTURE DEVELOPMENT: As city grows with standard of living increases, hence there is more

industries all the necessary infrastructures such as roads, railways, water supply system ,electrification, drainage system, land

development immediately take place for communication & to attract more people to stay there. g) EDUCATIONAL DEVELOPMENT: Education is a tool to

eradicate social evils. As population grows in urban areas & due to high standard of living they demand for good qualitative, competitive education, it is at very speedy growth at no cost.

5.2 Negative Impacts of urbanization on economy: There are some negative impacts of urbanisation due to excessive concentration on urban areas. a) HOUSING SECTOR: Due to growth of population in urban areas, the first basic need is house, a shelter. Due to

industrialization land cost has effectively increased, due to which the housing cost has tremendously boost up. Houses have become expansive. For rural migrants, due to their poor economic condition they are not able to buy the good houses & they create slums in open urban areas.


Impacts of Urbanisation on Economy - 2011

b) LAND MARKET: Due to urbanisation the agricultural lands are converted in to nonagricultural land for different uses such as industries, housing sector, public recreation spaces, institutes, etc. Land is the major resource required for growth of any city. Hence the land prices rises tremendously & unexpectedly due to more demands. c) UNEMPLOYMENT: Unskilled rural migrant many times lacks jobs in urban industrialization, & fails to meet financial obligations such as purchasing food to feed oneself and one's family, pay bills, mortgage or to pay rent. Rising unemployment increases the crime rate in cities. d) COST OF LIVING: Due to high standardized life, cost of living increases, things or finished good prices increases due to more demands in urban market, & becomes expensive. It becomes difficult for rural migrant people to meet both ends of life for basic necessities & amenities, & they are deprived from basic necessities of food, clothing & home & they creates slums. Thus rural poverty translates into urban poverty.


TRANSPORTATION: Transportation is a key issue in cities as

transportation is the movement of people and goods from one place to another. A mass of Poor people have to depend on public

transport to commute to their work & on other hand classes of rich people uses luxurious four wheelers for their smaller trip also. Due to inadequate investments, public transport is lacking in growing cities. Hence commuters have to spend more time in travelling & it reduces the efficiency of production. f) Environment: Due to urbanisation, industrialization results, which give rise to air, noise, water, land pollution effecting the health & living condition of poor labours ,which will reduce the production capacity of goods/products.


Impacts of Urbanisation on Economy - 2011

6. Conclusions:
As a city grows, the cost of housing and infrastructure also grows, since there are less water, land and building material available, and greater congestion problems. A city decays in this way, governments often do not meet the service needs of residents and urban development is dominated by private capital. In order to save the dying cities the different policies should be thought of such as y Encourage private/commercial sector investment. Private sector

development requires governments to provide appropriate regulatory frameworks, an attractive infrastructure investment, and a workforce with at least a basic education. y Policies should be made for High quality public transport which can provide many economic benefits and can be cost effective, with supportive land use policies. y Government should develop policies for affordable housing projects for different income groups & to make cities rid of unhealthy slums. y Policies should be developed for growth of High-tech industries & specialisation techniques which can earn valuable foreign exchange and lot of money for a country in the stock markets. y Investment policies for poor urban slums with affordable insurance & transit house facilities for slums should be thought of to make them sustainable in urban fabric. y How to support these structural shift & inequalities occurring in the process of urbanisation, instead of arguing about the cities growth & limit.


Impacts of Urbanisation on Economy - 2011

7. Planners Role in Urban Economy:

 First & most Important step is to achieve

proper land use

planning satisfying the future growth & demands of next 20 to 30 Years with provision of next 50 Years.  The Urban area shall be planned with future expansion

possibilities with connecting linkages in all directions.  The growth of the city & the peripheral area (rural) should go hand in hand to avoid concentration & exploitation at one center.  Transportation planning & road network shall be given prime importance as it is key factor of production economy. Public transport facilities shall be given importance.  Infra-structure shall be provided with future consideration of growth & demands.  Housing Sector shall be designed with sufficient open lands allowing future expansions.  Transit house facilities for slums & migrators shall be provided.  Lastly all resources are limited, hence shall be properly analyzed & used efficiently for benefits of humans & environment.


Impacts of Urbanisation on Economy - 2011

 Astha Agar Walla,(jan-2011), Agglomeration Economies and Productivity Growth in India IIMA ,DELHI, W.P. No. 2011-01-08
 Briefing paper 44, journal odi,London (November -2008), Opportunities & exploitation in urban labor markets. Overseas

development institute, London.  Charles m. Becker & Andrew r. Morrison(10th February 2005), Urbanisation in transforming economies
 Dr. Kiran wadhwa, chief economist (retd), hudco, New Delhi (July

2009) Affordable housing for urban poor. Ministry of Housing & Urban Poverty Alleviation, Government of India.
 Dr. S.P. Gupta (December 2002) , India vision 2020 planning

commission government of India, New Delhi.  Jean d'Aragon, (13thjune 2007) Housing & sustainable urbanisation in developing countries. International Development Research Centre, Ottawa, CANADA.  Marervath, Tobias just,(may 8, 2006), Building up India- outlook for Indias real estate markets published in India's real estate marketsDeutsche bank Research.  P.Duraisamy (2004) Health, Poverty and Economic Growth India Department of econometrics ,university of madras. in

 Todd Littman (18 August 2010), Evaluating Transportation Economic Development Impacts Understanding How Transport Policy and Planning Decisions Affect Employment, Incomes, Productivity, Competitiveness, Property Values and Tax Revenues , Victoria Transport Policy Institute.