Urbanization without Structural Transformation: Evidence from Consumption Cities in Africa∗

Abstract: Africa has recently experienced dramatic urbanization. Stan-dard theories of structural transformation cannot explain this result, as it was not driven by a green revolution or an industrial revolution, but by natural resource exports. I explain how the Engel curve implies that resource windfalls are disproportionately spent on urban goods and ser-vices, which gives rise to "consumption cities". I illustrate this theory us-ing both cross-country evidence and within-country evidence from Ivory Coast and Ghana using new data spanning one century and two identi-fication strategies (an instrumental variables strategy and a fixed effects approach). I find a strong causal effect of the production of cocoa, a rural-based natural resource, on the growth of cities. I discuss the implication