How is urbanisation linked to economic growth

Urbanization is population shift from rural to urban residency.

As cities develop, effects can include a dramatic increase and change in costs, often pricing the local working class out of the market, including such functionaries as employees of the local municipalities. For example, Eric Hobsbawm's book The age of revolution: 1789–1848 (published 1962 and 2005) chapter 11, stated "Urban development in our period [1789–1848] was a gigantic process of class segregation, which pushed the new laboring poor into great morasses of misery outside the centers of government and business and the newly specialized residential areas of the bourgeoisie. The almost universal European division into a 'good' west end and a 'poor' east end of large cities developed in this period." This is likely due the prevailing south-west wind which carries coal smoke and other airborne pollutants downwind, making the western edges of towns preferable to the eastern ones. Similar problems now affect the developing world, rising inequality resulting from rapid urbanization trends. The drive for rapid urban growth and often efficiency can lead to less equitable urban development. Think tanks such as the Overseas Development Institute have proposed policies that encourage labor-intensive growth as a means of absorbing the influx of low-skilled and unskilled labor.One problem these migrant workers are involved with is the growth of slums. In many cases, the rural-urban low skilled or unskilled migrant workers, attracted by economic opportunities in urban areas, cannot find a job and afford housing in cities and have to dwell in slums. Urban problems, along with infrastructure developments, are also fueling sub-urbanization trends in developing nations, though the trend for core cities in said nations tends to continue to become ever denser. Urbanization is often viewed as a negative trend, but there are positives in the reduction of expenses in commuting and transportation while improving opportunities for jobs, education, housing, and transportation. Living in cities permits individuals and families to take advantage of the opportunities of proximity and diversity. While cities have a greater variety of markets and goods than rural areas, infrastructure congestion, monopolization, high overhead costs, and the inconvenience of cross-town trips frequently combine to make marketplace competition harsher in cities than in rural areas.

In many developing countries where economies are growing, the growth is often erratic and based on a small number of industries. For young people in these countries barriers exist such as, lack of access to financial services and business advisory services, difficulty in obtaining credit to start a business, and lack of entrepreneurial skills, in order for them to access opportunities in these industries. Investment in human capital so that young people have access to quality education and infrastructure to enable access to educational facilities is imperative to overcoming economic barriers.

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