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Urbanisation, inequality and economic growth

Working papers

Written by Massimiliano Cali

In this background paper for the World Development Report 2009, Massimiliano Cali explores three important aspects of the urbanisation process in India: rural-urban disparities and their relation with economic development; the relation between urbanisation and growth; and the convergence hypothesis in cities’ growth. The findings of his study support the idea of a U-shaped relationship between rural-urban disparities in socio-economic indicators and the level of economic development. The study also finds that while levels of urbanisation and economic development go hand in hand across Indian states over time, the relationship is not as strong as first anticipated. Moreover, the rate of urbanisation and that of growth appear to be negatively correlated. The study concludes that there is a tendency towards convergence in growth rates among Indian towns over time and that, other things being equal, smaller towns grow faster than large ones. This runs counter to fears that large towns with high levels of urban concentration grow too quickly relative to other towns.

Massimiliano Calì