Cities in the Developing World.

Rapid urbanisation is a major feature of developing countries. Some 2 billion more people arelikely to become city residents in the next 30 years, yet urbanisation has received littleattention in the modern development economics literature. This paper reviews theoretical andempirical work on the determinants and effects of urbanisation. This suggests that there aresubstantial productivity benefits from cities, although unregulated outcomes may well lead toexcessive primacy as externalities and coordination failures inhibit decentralisation ofeconomic activity. Policy should operate both by identifying and addressing these marketfailures, and by seeking to remove institutional obstacles to decentralisation