Urbanization with and without Structural Transformation
AbstractWe document several new facts regarding urbanization and structural change in developing countries and develop a model that can account for them. Most developing countries follow a standard pattern: urbanization is a by-product of either "push" from agricultural productivity growth or a "pull" from industrial productivity growth. In these countries urbanization occurs with structural transformation and cities are "production cities", with a mix of workers in tradable and non-tradable sectors. For a distinct subset of countries that rely on natural resource exports, however, urbanization has increased at an equally rapid pace, but it is not associated with an increased importance of manufacturing and services in GDP. In these countries urbanization has taken place in "consumption cities" where the mix of workers is heavily skewed towards non-tradable services. We adapt a standard model of structural transformation to explain how natural resources can both drive urbanization as well as shift the composition of the urban labor force. The model may help explain why natural resource exporters - and Sub-Saharan Africa in particular - have experienced urbanization without structural transformation, which has implications for the pace of long-run growth in these areas.
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Bibliographic InfoPaper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 344.
Date of creation: 2013
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Postal: Society for Economic Dynamics Christian Zimmermann Economic Research Federal Reserve Bank of St. Louis PO Box 442 St. Louis MO 63166-0442 USA
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