Does Urbanization Always Help?

http://wwwcitylab.com/politics/2016/06/disparities-of-urbanization-global-china-india/487625/?utm_source=nl_link3_062216

Urban bicycle riders
Photography by Navesh Chitrakar/Reuters
citylab.com

Hello Everyone:

Today we move from saving World War II-era buildings to the subject of urbanization.  Urbanization has long been a mighty engine of economic growth in the United States, Europe, and western nations.  However, the link between urbanization and growth is weaker in developing nations, which coincidentally are experiencing a growth in urbanization.  Richard Florida points out, in his CityLab article "When Urbanization Doesn't Help," "...are experiencing the potentially devastating phenomena of 'urbanization without growth,' leaving billions of residents mire in poverty."  Edward Glaeser and his colleagues at Harvard University recently published a study, "What is different about urbanization in rich and poor countries?  Cities in Brazil, China, India and the United States," (http://www.sciencedirect.com; date accessed Nov. 1, 2016) compare the urbanization process in three of the world's emerging economies to the United States.

"Urban Population (% of total)"
Source: World Development Indicators, The World Bank
Chauvin and Glaeser et al.
citylab.com

Every country has undergone different levels and pace of urbanization.  Beginning in 1965, the United States already was 70 percent urban, Brazil was 5o percent urbanized, India and China nearly completely rural.  In the succeeding five decades, China underwent rapid urbanization, achieving just shy of 60 percent by 2015.  By contrast, India's urban growth was slower, rising from 18 percent in 1960 to 31 percent by 2010.  Of the three, Brazil is the most urbanized, experiencing a growth in urbanization of over 80 percent-greater than the United States.  In general, South American cities tend to be far more urbanized than Asian nations.  However, Mr. Florida points out, "...Asia is expected to see rapid urbanization in the coming decades."

New Chines construction
en.wikipedia.org

Pattern of urban size and growth

Let us begin with part of the part of the study that looks how each of the countries in the study compare to common concepts of urbanization.  The first concept is the so-called "rank-size rule," a typical benchmark of urban systems, which describes a country by its largest city or metropolitan.  Mr. Florida writes, "According to this rule, all other cities can be ranked in terms of this largest city, so the second largest city or cities will have half the population of the first, the third largest cities will have a third of the population, and so on."  This is predicated on a common power apparent in most physical, biological, economic, and social systems-Zipf's Law.  Based on the study, the hierarchy of cities is valid for the U.S. and Brazil, India and China have fewer large cities than Zipf's Law might predict.

Chennai, Tamil Nadu, India
newgeography.com

The second concept is Gibrat's Law which states "...that a city's population growth is more a matter of chance than a product of initial population level."  While Gibrat's Law seems to be valid for the contemporary U.S., this has not always been true throughout America's history.  It appears that Brazil has followed Gibrat's Law for the previous few decades-1980 to 2010- as has the U.S., but China and India have not.  Richard Florida points out, "There is no correlation between the growth of India and China's cities in the past few decades and the initial size of their population."  According to the study, this probably stems from recent speedy pace of urbanization and city growth in said Asian nations.  In short, the cities and metropolitan areas that recently grew in India and China were not necessarily the biggest in 1980.

"Relationship Between Income and Rents"
Chauvin and Glaeser et al.
citylab.com

Cities and the wealth and happiness of nations

The study then looks that the important link between population and  wealth.  Mr. Florida postulates, "If urbanization is successful, growing urban populations should corresponds with higher incomes and levels of development (in icon-speak, the study refers to this as "spatial equilibrium)."  To gauge spatial equilibrium, the study analyzes the connection between income levels and rents.

The chart on the left illustrates the relationship between the two.  The upward sloping lines for the U.S. and Brazil appear similar, spotlight the connection between rents and income.  However, if you look at the charts for China and India, the lines are flatter.  This indicates a weaker correlation between rent and income in China and nearly non-existent in India.

Rocinha Favela, Rio de Janeiro, Brazil
en.wikipedia.org

The Glaesner et al. study also looked at the relationship between urbanization and happiness.  Typically, the level of happiness corresponds to rise with income and there is an approximate $10,000 baseline that seems to be necessary for a slice of it.  Mr. Florida writes, "Since income tends to rise with urbanization, we might expect a connection between happiness and urbanization-although recent recent research has shown that happiness trails off in the very largest cities."  While income and happiness weakly correspond in American cities, the connection is slightly stronger, but weak, in China and India.  (Data for Brazil was not available to Mr. Glaeser et al.)  Other research found that happiness dwindles in large, dense cities, possibly because of noise, congestion, stress, and other attending big city problems.

Detroit skyline
man.com

The Glaeser et al. study also considers the mobility rate of each of countries.  Mobility is important because it allows individuals to travel to places that offer greater opportunity.  The study revealed that mobility only increased in China, "...where it more than doubled from 6.3 percent in 2000 to 12.8 percent in 2010.  By contrast, mobility in Brazil dropped from 9.1 percent in 2000 to 7.1 percent in 2010, at the same time that mobility substantially fell in the United States over the past twenty years.  Last, mobility remained low in India, where only 2 percent of the population moved between 2006 and 2010.

Busy Mumbai streets
Mumbai, India
mumbai77.com

Density and human capital

Perhaps the biggest determinants pushing urbanization and development are density and human capital.  A large body of research has demonstrated how dense cities are magnets for talent and spur economic development, rising incomes and living stands.  The upside is in the three developing countries in the study-Brazil, China, and India- the Glaeser et al. study concluded a stronger correlation between human capital and economic success compared with the United States.  India and China also demonstrated a stronger correlation between density and economic prosperity than American and Brazil.

Shopping in Beijing
Beijing, China
chinatourguide.com

The Glaeser er al. analysis also found greater levels of human capital are associated with urban population growth in Brazil, China, and the United States.  This effect is more pronounced in China, where "...a 1 percentage point increase in the share of adults with college degree is associated with a 22 percentage point increase in population growth between 1980 and 2010.  Similarly, in Brazil, a 1 percentage point increase in the share of adults with college degrees is associated with a 6 percentage point increase in population growth."  We can compare this to U.S. where "...where a 1 percentage point increase in the share of degrees is associated with a 2.2. percentage point increase in population growth."  However, the study is missing comparable data for India, it found that education is a relatively weak indication of population growth.

Favela with a high rise in the background
Rio de Janeiro, Brazil
geauxingplaces.com

Finally, the Glaeser et al. study concludes that patterns of urbanization and economic growth in America is more applicable to some developing and urbanizing countries.  Brazil's patterns of urbanization and development are similar to the U.S., which Richard Florida opines, "....makes sense, given that it is the most urbanized of the developing nations."  China's urbanization and development mimics some aspects of the U.S., but not others.  India's urbanization pattern is failing to generate any forward movement in income, happiness, and mobility experienced in the U.S., Brazil, and China.




The Glaeser et al. study illuminates the stark differences between "...already-urbanized nations-which have benefited from a strong connection between urbanization, human capital, accumulation, and economic growth-and less-developed nations, where the connection remains much and mobility is lower."  Regardless, the authors end on an upbeat note, arguing,

the forces that urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium.

Richard Florida comes aways with a more pessimistic understanding of the Glaeser et al. study, "especially when taken in combination with recent research on the process of urbanization without growth."  Some of Edward Glaeser's personal research suggests that emerging economies are trapped in, what Mr. Glaeser refers to as poor country urbanization, "where globalization has sundered the processs that connected urbanization and growth in the past."  Unchecked, it is possible that future urbanization in most of the developing world will resemble the situation in India than what has happened in Brazil or China.