Urbanization and Human Development Index: Cross-country evidence

The present study assesses the impact of urbanization on the value of country-level Human Development Index (HDI), using random effect Tobit panel data estimation from 1990 to 2017. Urbanization is measured by the total urban population, percentage of the urban population, urban population growth rate, percentage of the population living in million-plus agglomeration, and the largest city of the country. Analyses are also separated by high income, upper middle income, lower middle income, and low-income countries. We find that, overall; the total urban population, percentage of the urban population, and percentage of urban population living in the million-plus agglomerations have a positive effect on the value of HDI with controlling for other important determinants of the HDI. On the other hand, urban population growth rate and percentage of the population residing in the largest cities have a negative effect on the value of HDI. Finally, we suggest that the promotion of urbanization is essential to achieving a higher level of HDI. The improvement of the percentage of urbanization is most important than other measures of urbanization. Developing countries need to promote balanced urbanization with the improvement of basic urban services for improving the HDI rank