Innovation and Development
Chapter 5: Increasing urbanization
In 2008, the world reached a milestone: for the first time in human history, more people in the world lived in urban areas than in rural areas, making urbanization one of the defining traits of the twenty-first century. This reality brings opportunities and challenges. On one hand, cities allow for economies of scale, and create proximity enabling productivity, innovation, and a concentration of capital – all of which are indispensable for modern economic growth. Indeed, urbanization has been an inevitable rite of passage for any country that has ever achieved sustained economic growth or social development. However, when cities are not properly managed – without well-adapted policies, and plagued by weak economic growth – urbanization can lead to concentrated poverty and slum growth. The challenges of urbanization are far-reaching and destabilizing – poverty, environmental degradation, income inequalities, historical socio- economic inequalities, marginalization, as well as economic, cultural, and social exclusion. Climate change, another modern phenomenon and one of the most formidable challenges of our times, has also been intricately linked to urbanization – cities today produce a disproportionate amount of pollution, while consuming roughly 75 percent of the world’s resources, according to estimates by Asian Development Bank (ADB). But while cities are at risk of bearing the greatest brunt of the effects of climate change, they also offer the most potential for innovation and resources to combat this challenge. Some progress against urbanization’s myriad negative effects has been made to date. According to UN-HABITAT estimates, a total of approximately 227 million people in the developing world
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