The Limits to Urban Growth: Suggestions for Macromodeling Third World Economies

Abstract

Section II illustrates how existing macro models of the Third World are "pro-urban" biased: typically they minimize the potential limits to urban growth and are silent on the issue of overurbanization. Section III lists some key forces which might serve to retard the rate of urbanization. Section IV develops this theme at length by offering some explicit suggestions on how these forces might be introduced into a general equilibrium model of Third World development. Central to this discussion will be potential cost-of-living differentials between urban and rural areas, urban housing availability, the quality of urban public goods, urban land scarcity, modern sector factor requirements and resource "bottlenecks," and the competing demands of "unproductive" urban capital accumulation. While no conclusive results are offered in the present paper, it seems to us timely nevertheless to open the debate on strategies for macromodeling the "limits to urban growth" in Third World economies.