More Urban Growth = Less Rural Poverty

By: Benjamin de la Pena ,Source:  http://www.interaksyon.com

Prof. Randy David’s recent column in the Philippine Daily Inquirer discusses why the poor move to cities. It is spot-on in its analysis of urban migration. In a nutshell, they are drawn by opportunity. People come to cities to earn more, to get an education, and to better their lives. Cities, especially big cities, provide more opportunities per square kilometer than rural areas do.

Prof. David correctly points to the failure of our long history of “balik-probinsya” programs, which give the urban poor incentives to move back to the countryside. The poor, finding no opportunities in the provinces, eventually return to the cities.

He prescribes “a willful long-term program to develop the countryside” to address rural poverty. He calls for better land reform, more schools and hospitals in rural areas, and technical and financial support for rural enterprises.

I agree with him that we need to invest in agricultural productivity and in better rural schools and hospitals. On the other hand, I disagree that rural investment will, as he implies, reduce the migration to cities.

It is a common mistake to think that if the poor go to the cities for opportunity, then maybe we can prevent them from migrating to the cities by bringing opportunity to them. However, this doesn’t square with reality, as the experience of Japan and South Korea shows. Better farm support will create better farms; it will not stem the migration to cities.

Japan and South Korea had successful and well-funded rural investment programs and successful land reform programs. Their governments broke up land oligarchies, built great rural infrastructure, and provided excellent support to small farms. The farmers in these leading global economies are protected and productive; they earn a profit.
And yet, despite rural prosperity, urbanization still exploded in these two countries. More than 90 percent of Japan’s population is urban; 83 percent of South Koreans live in cities.
Furthermore, Greater Tokyo is one of the top five economies in the world. It has a population of 35 million, and it is the largest megacity in the world. Seoul, on the other hand, has the world’s fourth-highest GDP (behind Tokyo, New York City, and Los Angeles). Eleven million people call it home.
It can be argued that the success of their cities allowed Japan and Korea to fund their rural prosperity programs. A symbiotic relationship exists between the urban and the rural, between the farm and the city. Urban growth improves rural incomes because the city is the market for farm products.
This is why I differ with Prof. David on his prescription. If we want to cure rural poverty, we need to invest in urban opportunities. William Cobbett, manager of Cities Alliance, has a poster in his office that says “More Urban Growth, Less Rural Poverty.” It is a counter-intuitive statement, but historical evidence has proven it to be true.

Cobbett says, “In the period since 1992 and the 15 or 20 years thereafter, we saw unprecedented reduction in (global) poverty, mainly driven by processes in East Asia. Almost all of that poverty reduction can be attributed to urbanisation and the consequences of urbanisation. That was, in many instances, rural people getting access to improved economic opportunities, but in urban areas.”

In 2008, the World Bank’s Commission on Growth said the same thing. It pointed out that urbanization was a proven strategy to achieve economic prosperity and to reduce poverty. I quote from The Growth Report: Strategies for Sustained Growth and Inclusive Development:

“If history is any guide, large-scale migration to the cities is part and parcel of the transformation economies must go through if they are to grow quickly. No country has ever caught up with the advanced economies through farming alone. In countries that in the last 50 years sustained episodes of 7 percent growth or more over 25 years or longer, manufacturing and services led the way. In a few cases agriculture actually shrank.”
The report points out that this development is not new: “People migrated from the countryside to the towns during Britain’s industrial revolution, and they have done so in every industrial revolution since. It is extremely rare to achieve per capita incomes above $10,000 (in purchasing power parity terms) before half of the population lives in the cities. Urbanization is the geographical corollary of industrialization: as workers leave the farms for the factories, they leave the fields for the cities.”

The report adds, “Although no country has industrialized without also urbanizing, in no country has this process been entirely smooth. Many fast-growing cities in the developing world are disfigured by squalor and bereft of public services. It is easy to conclude that urbanization is an unpleasant side effect of growth, best to be avoided. But this is a mistake. The proper response is not to resist urbanization, but to make it more orderly.” 
So, what do we do? Understand, please, that I am not saying that we should not invest in the countryside; we definitely need to do so.
But I agree with the Growth Commission’s statement that “governments should invest in agriculture, then, insofar as such investments are justified on their own merits. But as a way to slow the growth of cities, rural investment is likely to disappoint.”
The bottom line is, we need to invest in the countryside and we must also invest in our cities, especially our big cities. Research by physicists and mathematicians shows that bigger cities are more efficient and create more innovation and opportunities, while needing less infrastructure. McKinsey ran scenarios of urban and economic growth in China that showed that the growth of a few big cities was a better investment than trying to spread the investment and growth in many smaller cities.
As we invest in our cities, we need to get them right. We must make sure that they are inclusive and that they expand opportunities.
Cobbett shows us the way with this statement: “The key to getting our cities right is to transform policies that, at the moment, are dominated by the practice of social exclusion and anti-poor policies.” This means that we need to create cities that are walkable and have good public transit, cities that provide affordable housing and good schools and parks.
As I’ve said before, we need to change how we think about Metro Manila and the rest of our cities. The urban population in the Philippines is growing, and it will continue to do so. This is a good thing.
We need to make sure our cities can provide opportunities for everyone. We need to create cities that are efficient engines for moving people out of poverty.

Benjamin de la Peña is the Associate Director for Urban Development at the Rockefeller Foundation. The views and opinions expressed in this article do not necessarily reflect those of the Foundation.

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