Cities and development

Urbanization is becoming the world’s mega-trend, but it has been accompanied by increasing or persistent inequalities. While many social scientists have, therefore, advocated rural development, mainstream urban economists have viewed these trends as both natural and temporary, suggesting that, in the process of development, inequalities first rise, plateau, and then decline with more and more urbanization. Bearing in mind the disparities in the causes and effects of urbanization in the Global North and the Global South, this chapter revisits the urbanization and development debate. It does so by focusing on the urban-urban income gap, both in the Global North and in the Global South. The focus, then, is mainly on the evolution of poverty and inequality among cities, thereby excluding all other crucial problems that have an urban dimension, such as conflict and environmental damage as being out of the scope of this chapter. Will the current trend in urbanization lead to a convergence of urban incomes? By empirically estimating the current levels and patterns of long-term income inequalities, the chapter shows that it is not cities, but their form, economic structure, and institutions that shape the distribution of their wealth.