Sharply increasing inequality became an integral part of the narrative on Chinese development since the beginning of the reform process in 1978. Over the past decade, however, many studies have argued that inequality has been plateauing, or even declining. This column uses several datasets, including household surveys and regional-level government statistics, to show evidence of a mitigation of inequality in the early 21st century, and indeed, declining rates over recent years. Possible drivers of this turnaround are urbanisation, transfer and regulation regimes, and tightening rural labour markets.
Ravi Kanbur, Yue Wang, Xiaobo Zhang, 15 March 2017
Rémi Jedwab, Edward Kerby, Alexander Moradi, 02 March 2017
At the turn of the 19th century, sub-Saharan Africa was the least urbanised region in the world, with only about 50 cities of more than 10,000 inhabitants. By 2010, the number of cities had increased to almost 3,000. This column, taken from a recent VoxEU eBook, explores how colonial railroad investments transformed Africa’s economic geography, and asks whether economic outcomes would have been different and development delayed without the railroads.
Girum Abebe, Stefano Caria, Marcel Fafchamps, Paolo Falco, Simon Franklin, Simon Quinn, 09 December 2016
Youth unemployment is a growing problem around the world, particularly in urban areas. This column assesses the impact of labour market interventions in Addis Ababa targeting two issues commonly faced by unemployed youth: job search costs and a poor ability to signal their skills. A transport subsidy and a job application workshop were both found to have significant positive effects on youth labour market outcomes, pointing to the important role policymakers can play in helping young people find satisfying employment.
Hisamitsu Saito, Toshiyuki Matsuura, 25 November 2016
Agglomeration’s impact on product quality has received much less attention than its impact on productivity, despite the importance of quality as a precondition for economic development. This column employs plant-product-level data from Japanese manufacturing to assess the effects of urban agglomeration on product quality. The findings suggest that state and municipal tax breaks, and other public efforts to attract enterprises, enhance economic competitiveness by improving product quality along with productivity.
Edward Glaeser, 19 October 2016
There is strong correlation between cities and wealth. In this video, Edward Glaeser explains why cities and urbanisation foster prosperity and development. This video was recorded at the International Growth Centre.
Gilles Duranton, Ejaz Ghani, Arti Grover Goswami, William Kerr, 27 May 2016
Optimising the allocation of factors of production improves productivity. In India, where evidence suggests land is severely misallocated to inefficient manufacturing firms, access to financing is disproportionately tied to access to land. This column examines the link between the misallocation of land and access to capital through financial markets. A very strong positive correlation emerges between the two, consistent with the fact that land and buildings can provide strong collateral support for accessing finance from the credit market.
Gaurav Datt, Martin Ravallion, Rinku Murgai, 26 March 2016
There has been much debate about the poverty impacts of economic growth and structural transformation in developing countries. This column revisits these issues using a newly constructed dataset of poverty measures for India spanning 60 years. There has been a downward trend in poverty measures since 1970, with an acceleration post-1991, despite rising inequality. Post-1991 data suggest stronger inter-sectoral linkages. Urban consumption growth came with gains to both the rural and urban poor. The primary/secondary/tertiary composition of growth has ceased to matter, as all three sectors contributed to poverty reduction.
Kristian Behrens, Frédéric Robert-Nicoud, 24 July 2014
Large cities are more unequal than the nations that host them. This column argues that this is because large cities disproportionately reward talented superstars and disproportionately ‘fail’ the least talented. Cities should thus be the primary focus of policies to reduce inequality and its adverse consequences for society.
Ejaz Ghani, William Kerr, Ishani Tewari, 11 July 2014
Some cities grow through specialisation others through diversity. This column measures specialisation and diversity for the manufacturing and services sectors in India. It finds that Indian districts with a broader set of industries exhibit greater employment growth. This is particularly true for low population densities, rural areas and unorganised sector, reflecting knowledge flow and the inclusive nature of employment growth due to diversity.
Coen Teulings, 11 July 2014
The financial crisis and the Great Recession have led to calls for more economic history in economic education. This column argues for a much broader use of history in economics courses, as a device for teaching both the logic and the empirical relevance of economics. A proposed curriculum would include the rise of agriculture, urbanisation, war, the rule of law, and demography.
Shahid Yusuf, Danny Leipziger, 03 March 2014
Urbanisation and GDP per capita are positively correlated across countries. However, when the sample is restricted to developing countries, urbanisation and growth are more loosely related – particularly in Africa. CEPR Policy Insight 71 argues that the low share of manufacturing in developing-country cities may help to explain this discrepancy. Strengthening urban finances, embracing technology, improving skills, and stimulating the formal sector will help cities to promote growth. Since decisions affecting urban development can have lasting impact, longer-term planning deserves greater attention than it is currently receiving.
Danny Leipziger, Shahid Yusuf, 03 March 2014
Urbanisation and GDP per capita are positively correlated across countries. However, when the sample is restricted to developing countries, urbanisation and growth are more loosely related – particularly in Africa. This column argues that the low share of manufacturing in developing-country cities may help to explain this discrepancy. Strengthening urban finances, embracing technology, improving skills, and stimulating the formal sector will help cities to promote growth. Since decisions affecting urban development can have lasting impact, longer-term planning deserves greater attention than it is currently receiving.
Takatoshi Tabuchi, 28 November 2013
Two important long-run trends in economic geography are steady urbanisation and agglomeration to the big cities. This column presents recent research on population trends focusing on fixed regions over time. In seven of the eight countries studied, the region containing the largest metropolitan area significantly increased in population share at the expense of the rest of the country over the past few centuries. A ‘new economic geography’ model with multiple, asymmetric regions can replicate this new stylised fact.
Pierre-Philippe Combes, Sylvie Démurger, Li Shi, 09 July 2013
Economic geography typically predicts positive returns to urban scale. This column argues that China faces unprecedented challenges in the face of a new wave of urban migration. Accelerating urbanisation has been and will continue to be – if managed correctly – an opportunity for sustaining economic growth by capturing the benefits from urban agglomeration.
Ejaz Ghani, Arti Grover Goswami, William Kerr, 27 July 2012
India’s cities are growing at a growing rate – despite the slowdown in the pace of industrialisation. But beneath the overall trend, many companies are moving out of the city. This column looks at data on manufacturing firms and finds that while those in the formal sector are leaving the city, those in the informal sector are moving in.
Kristian Behrens, Giordano Mion, Yasusada Murata, Jens Südekum, 09 November 2011
People spend years of their lives shuffling from city to city and countless amounts of money sending goods along similar journeys – a result of so-called ‘spatial frictions’. This columns asks whether these frictions matter for the size distribution of cities, the sizes of individual cities, and the productivity of cities. The short answers are: no, yes, and it depends.
Paul Romer, 10 June 2011
Paul Romer of NYU’s Stern School of Business talks to Romesh Vaitilingam about his vision of dysfunctional poor countries kick-starting their own development by creating new cities with new rules – what he calls ‘charter cities’. The interview was recorded in London in June 2011 at a ‘blue-sky’ conference on development policy-making organised by CAGE, the Centre for Competitive Advantage in the Global Economy at the University of Warwick. [Also read the transcript.]
Klaus Desmet, Esteban Rossi-Hansberg, 12 March 2011
Are the world’s megacities becoming a sprawling, overfed, and uncontrollable mass that needs to be restrained for the good of society and the environment? This column suggests that policies aimed at reducing the dispersion in city sizes will hardly improve the wellbeing of the people who live there. If anything, in some developing countries, such as China, large cities may actually be too small.
David Cuberes, 01 December 2010
How do cities develop and grow? This column presents historical data from a large number of cities in several countries. It finds that there are a few cities that grow much faster than the rest; the first cities to grow quickly are the largest; and this pattern of sequential city growth is more pronounced in periods of rapid growth in urban population.
Matthew Kahn, 11 September 2010
Most scientists agree that climate change is underway or at least on the horizon. This column introduces the author's book 'Climatopolis: How Our Cities will Thrive in Our Hotter Future.' It outlines an optimism and an irony: Urban economic growth may have caused climate change, but through the free market, it will also help us to adapt to it.