How much do we really know about the relationship between urbanization and poverty?

In the fourth plenary session of the 2012 GDN Annual Conference, focusing on urbanization and poverty, we took one step closer to seeing the inter-linkages between the two. It quickly became obvious that it is very hard to get a handle on urbanization without addressing poverty.

Plenary session 4 'Urbanization and poverty' - Photo credits http://www.vegeldaniel.com

Plenary session 4 ‘Urbanization and poverty’ – Photo credits http://www.vegeldaniel.com

Chaired by Gabor Kezdi, Professor and Head of Department of Economics, with the Central European University, the session discussed the interplay between these two notions, to better understand how to create maximum impact for the developing and undeveloped worlds.

Robert Buckley (New School of Research, USA) was the first speaker. He magnified themes related to urbanization and development and pondered whether cities were becoming Malthusian. Still optimistic about the market, Buckley argued that it is mainly a public policy issue, characterized by speculation.

The growth issues we need to understand

Beginning with a few seemingly basic questions about the growth issues involved, in the urbanization process, and how migration impacts policy,  Buckley then provided background information on Malthus, and the era he focused on, where conditions were not so good. And where for a very long time, the situation was rampant with pessimism, disease and superstition, posing major problems for development.

A closer look at Africa, as case study

Using the African context, as an explanation to the Malthusian question posed earlier,  Buckley underlined how the continent is indicative of what happens in developing cities of today’s world. Indeed, taxation, policies, and the status quo in Africa reveal many parallels within the rest of the developing world.

What also becomes evident is that future world population growth will be overwhelmingly urban. But thanks to urban innovations, the city, has now become inhabitable. Cities are no longer “dark Satanic mills,” where density was deadly.

What does urbanization look like today?

Twenty-first century urbanization is different, with opposing trends between North and South, what may seem self-evident in a globalized world. International migration has also had a seminal role to play, in this scenario. There is a strong argument for migration, contending that when people are able to migrate, gains are massive, with up to a tenfold increase in income.

Buckley concluded his session by offering a number of conceptual and practical solutions, that involve rethinking restrictions on migration, recognizing and enhancing the capacity of slum communities, getting people’s energy involved, and making greater use of new technologies.

What role does an informal economy play in this scenario?

Ravi Kanbur, a member on the GDN Board of Directors and Professor of Economics at Cornell University, was the second speaker and talked extensively about the informality lens, or the informal economy, how to define, understand, and make better use of it.

[youtube http://www.youtube.com/watch?v=-6stXWgGeX0&w=420&h=315]

Kanbur started by shedding light on informal sector employment, and underemployment, and how they both have aggravated urban poverty. Informality has now become a prominent feature of the urban landscape in developing countries, with a strong association between poverty and informality.

Exactly what is informality?

Formality is defined as employment under the ambit of state regulation and informality is the opposite of that, where workers don’t have social protection by employers, and are beyond the scope of regulation. There still is a large percentage in the developing world and seems to be on the rise.

Taking a closer look at informality, a number of scenarios are introduced, including economic activities which have purposely adjusted out of the ambit of the law, where studies have come up with three types: the evaders, avoiders, and the outsiders.

We do not have solid empirical evidence of the magnitude of these different categories, but do know that technology has changed the name of the game, and now makes economies of scale less relevant than ever. Technology allows for shrinking the size of enterprises, and their labor force, and thus, changing the entire dynamic.

The role of policy

As we discuss these issues, policy gains significance, and it is usually provided as an explanation for many of these economic behaviors. The Economist argues that thanks to baroque regulation, half the labor force toils in an informal economy, unable to reap benefit from technology and a greater scale. And that is also how seemingly outrageous quotes such as “93% of the workforce is informal,” come into being.

We soon find that the study of urbanization has to involve informality, from a variety of different perspectives. Although an old and much investigated topic, many questions remain unanswered.

A closer look at today’s urban phenomenon

The third and final speaker, Carlos Vainer (Federal University of Rio de Janeiro) offered an interesting perspective on urban poverty, largely defined in sociological and economic terms.

[youtube http://www.youtube.com/watch?v=rcY8iDomiC0&w=420&h=315]

Vainer addressed the issue of the impact of large urban projects and mega-events on social conflicts. As a result of the policies that try to attract these large urban projects and mega-events (such as the FIFA World Cup), according to Vainer there is an increase in inequality and a decrease in democracy in the cities. The role and resistance of civil society organizations is therefore very important – and this give reasons for hope as these movement can challenge the new form of authotarianism that is emerging in connections to mega-events.

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About Maya Madkour
I am a Sociologist, eternal optimist, and spreader of joy. I was born in London, raised in Cairo, and call Dallas my home away from home; where I have been travelling for the past fourteen years. This blog is a place where we can share insights, learn, grow and master the art of life together.

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