The global pattern of urbanization and economic growth: evidence from the last three decades

Abstract

The relationship between urbanization and economic growth has been perplexing. In this paper, we identify the pattern of global change and the correlation of urbanization and economic growth, using cross-sectional, panel estimation and geographic information systems (GIS) methods. The analysis has been carried out on a global geographical scale, while the timescale of the study spans the last 30 years. The data shows that urbanization levels have changed substantially during these three decades. Empirical findings from cross-sectional data and panel data support the general notion of close links between urbanization levels and GDP per capita. However, we also present significant evidence that there is no correlation between urbanization speed and economic growth rate at the global level. Hence, we conclude that a given country cannot obtain the expected economic benefits from accelerated urbanization, especially if it takes the form of government-led urbanization. In addition, only when all facets are taken into consideration can we fully assess the urbanization process.

Figure 1. Global patterns of changes in urbanization, 1980–2011.

(a) shows the global pattern of urbanization level in 1980, and (b) that observed in 2011. The urbanization level (0–100%) has been divided into ten categories, in blocks of 10%. Each category is denoted by a different color. World urbanization demonstrated remarkable growth in both developed countries and developing countries during 1980–2011, especially in China, Southeast Asia, and Africa.

Figure 2. The distributions of total population and GDP per capita by urbanization level.

Applying similar population pyramid methods, the structure of total population and GDP per capita are detailed and compared between 1980 and 2011. The blue represents 1980 and the red represents 2011. (a) shows the total population, and (b) shows GDP per capita.

Figure 3. Urbanization speed and economic growth rate, 1980–2011.

(a) shows the global pattern of speed of urbanization, and (b) shows the economic growth rate during 1980–2011. Both the speed of urbanization (0–1.5%) and the economic growth rate (0–11%) have been divided into five categories, according to the respective annual increase. Each category is denoted by a different color.

Figure 4. Scatter plots of level and speed of urbanization and economic growth.

This figure corresponds to the scatter plot of model , for level in 1980 and 2011, and for speed during 1980–2011. (a) and (b) show the correlation between urbanization level and GDP per capita in 1980 and 2011, respectively. (c) shows the correlation between speed of urbanization and economic growth rate during 1980–2011. Please note the marked correlation difference between level and speed of urbanization and economic growth in the world.

Figure 5. Typical countries demonstrating no significant correlation between speed of urbanization and economic performance.

Plotting the annual economic growth rate on the X-axis and speed of urbanization on the Y-axis, different countries form a set of scatter points on a quadrant map. (a) shows the countries with high urbanization speed and low economic performance, and (b) shows the countries with low urbanization speed and high economic performance. Names of countries are abbreviated to three-digit letters according to the ISO criterion. The full names of the countries are seen in Appendix S3. The results highlight the fact that speed of urbanization has no significant correlation with the economic growth rate of observed common phenomena throughout the world.