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Urbanization with and without Structural Transformation

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  • Douglas Gollin

    (University of Oxford)

  • Remi Jedwab

    (George Washington University and LSE)

  • Dietrich Vollrath

    (University of Houston)

Abstract

We 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 Info

Paper provided by Society for Economic Dynamics in its series 2013 Meeting Papers with number 344.

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Date of creation: 2013
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Handle: RePEc:red:sed013:344

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Cited by:
  1. Christiaensen, Luc & Todo, Yasuyuki, 2013. "Poverty reduction during the rural-urban transformation : the role of the missing middle," Policy Research Working Paper Series 6445, The World Bank.
  2. Sanghamitra Bandyopadhyay & Elliott Green, 2013. "Urbanization and Mortality Decline," Working Papers 46, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.

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