Abstract
Urbanization is a global trend that has both positive and negative impacts on economic development. Urban areas are hubs of innovation, investment, and job creation, leading to increased productivity and economic growth. It also brings challenges such as rapid population growth, environmental degradation, and social inequality. Industrialization, closely linked to urbanization, drives economic growth but leads to environmental and social issues. Balancing the benefits of industrialization with sustainable development and social inclusion is crucial. Policymakers ensure that economic growth is shared equitably, and develop environmentally and socially sustainable. Urbanization poses challenges in terms of strained infrastructure, inadequate housing, and social exclusion. These challenges need to be addressed through comprehensive approaches, including investments in infrastructure, education, social welfare, and sustainable urban design. Government, civil society, and private sector partnerships play a vital role in promoting inclusive and sustainable economic growth.
TopIntroduction
Urbanization has played a significant role in development throughout human history (Bairoch, 1988). It might be argued that the two processes are interrelated, meaning that urbanization cannot occur without development. However, it is still not been determined how these two processes are causally related (Jacobs, 1966). According to Gallup et al. (1999), urbanization is a result and a cause of economic progress. The proportion of the urban population worldwide expanded from 30% in 1950 to roughly 50% in 2010 following economic growth (United Nations, 2007). It is the process of people moving to cities and urban areas, which leads to the growth and development of those areas. Nearly 55 percent of the world population lives in Urban areas, and the trend is expected to continue. The World Bank (2015) projects that by 2045, there will be six billion people living in cities, increasing to two billion urban dwellers. This increases population density and creates job opportunities, improved infrastructure, and a better quality of life by contributing to over 80 per cent of the world’s GDP produced in the cities. Urbanization leads to sustainable growth, provided the rising productivity is properly managed, allowing for innovation and the adoption of new ideas.
Urbanization and economic growth go hand in hand in several nations. It is still unresolved if economic expansion encourages urbanization or the opposite or whether these two processes are separate. As regional economies transition from an agrarian-based economy to an urban economy centered on industry and services, economic expansion typically requires converting agricultural land to urban uses (residential, commercial, and industrial). This trend is observed in urban areas in low- and middle-income nations undergoing structural economic changes and exurban (or peri-urban) regions in rich countries affected by the economic growth of surrounding urban centers. In many low and middle-income countries, substantial financial inflows and foreign direct investment (FDI) have altered urban and rural areas. For instance, FDI in the Pearl River Delta region of China has caused a change from a rural-based economy to an industry-based export economy characterized by labour-intensive production processes that consume sizable amounts of land and have sparked significant rural-urban migration.