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Lecture 5 - Urbanisation, Migration and the Role of Cities Generally
the more developed a country is, measured by per capita income, the greater the share of population living in urban areas. However developing countries today are more developed than today's developed countries were when they were at a comparable level of development. LDCs are urbanising at a much faster rate, but incomes are not being improved as quickly as they did in MDCs. The largest cities in the world are in developing countries. Rapid growth enables and necessitates growth of slums. A city is an area with relatively high population density that contains a set of closely related activities. Firms like to be located in areas with similar firms doing similar work. Economies of scale are therefore experienced for commercial activities and the provision of public services. There are also disadvantages of rapid urban growth like congestion and overloading of services, pollution, crime and overstretched labour markets. AGGLOMERATION ECONOMIES Cities are formed because they provide agglomeration economies which are cost advantages to producers and consumers from location in cities and towns. They can be either urbanization economies (Agglomeration effects as associated with the general growth of a concentrated geographic region. Public and support services (e.g. banking) develop.) or localisation economies (Agglomeration effects captured by particular sectors of the economy as they grow within an area. Supply chain development and skilled employees.). Certain industries will benefit more from clustering. EFFICIENT URBAN SCALE Closely related industries (those with strong backward and forward linkages) benefit from being closely located but not so much for firms from unrelated industries. Although technological progress can spill over from one industry to another. There may be congestion costs - the higher the urban density, the higher the costs of real estate. It is more expensive to build vertically than horizontally but if urban land costs are high then it makes more sense to build upwards. This requires measuring key economic and financial variables as well as economic, social, political, demographic, environmental externalities. Responses to urbanisation in LDCs Building upward in large cities spread of slum-type accommodation on the outskirts of cities, location of foreign investment in less crowded cities via tax and other incentives. Some cities and countries are trying to formalise the ad-hoc accommodation of the very poor. Why are slums created? Rural-urban migration means initial dwelling is of poor quality and cheap. Antiquated building codes mean dwellings often can't be legally improved. Weak property rights mean incentives to invest in housing are low. Responses to urbanisation in MDCs Appreciation of leisure, moving to countryside (Nordic countries), clustering of wealth in countryside (England) and lack of jobs and moving to countryside (Greece). Creation of green urban spaces everywhere and distance working. URBAN HIERACHY MODEL According to this model plants in various industries have a characteristic market radius that results from economies of scale in production, transportation costs and the way the demand for land is spread over space. The larger the economies of scale in production and the lower the transportation costs, the larger the radius of territory that will be served by that industry to minimize costs. Small cities contain activities with short market radii while large cities emerge to contain activities of both small and large radii. DIFFERENTIATED PLANE MODEL
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