The Urbanization, Development, Environment, and Inequality Nexus: Stylized Facts and Empirical Relationships

Publication | October 2017

Higher levels of urbanization have worsened poverty and rural-urban gaps, particularly in Asia.

We summarize and expand the understanding of the urbanization, development, environment, and inequality nexus. Economic growth and development, urbanization, and electricity consumption are highly correlated. While urbanization may be more evidence of economic progress than a catalyst for economic growth, there is some evidence that poor countries are over urbanized. Also, electricity consumption is at least a proxy for, if not a cause of, both nonagricultural employment and improved quality-of-life opportunities that encourage rural-urban migration. In other words, electricity consumption may cause urbanization and not the other way around. Urban density is associated with energy efficiency and/or savings in buildings and transport, but is probably not related to energy emissions from industry; and, national urbanization levels are not indicative of the density of the cities. Lastly, cities are disproportionately wealthy, but are associated with poverty, too. Increases in gross domestic product per capita unambiguously lower poverty and narrow rural-urban gaps. By contrast, levels of urbanization were either unrelated to such measures, or had a nonlinear effect, where initially increases in urbanization likewise led to improvements, but at higher levels of urbanization, increases in urbanization exacerbated poverty and rural-urban gaps.


Additional Details

  • Environment
  • Energy
  • Poverty
  • Urban development