What is the Cause of Urbanization?…World Capitalism

By Jaymie Gross

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Through the 1970’s, urbanization in the developing world was fostered by import-substitution industrialization (ISI). Economic growth during this period was promoted through tariffs and subsidies, designed to reduce developing countries dependency on the exportation of primary goods while simultaneously supplying the domestic market. Along with significant economic gain, developing countries incurred rapid urbanization, causing some to warn of the risk of over-urbanization. While such concerns seemed hasty in 1970, currently evidence suggests the presence of over-urbanization in developing countries.

In his article Urbanization, Migration and Development, Bryan R. Roberts proposes that the urbanization currently underway in developing countries, Latin America specifically, is significantly different from that which prevailed as recently as the early 1970’s. Today’s world economy has raised the level of urbanization and exposed developing countries to the ills of over-urbanization. In the world economy, developing countries are increasingly dependent on developed nations for financial support. "Loans are tied to policy requirements that severely limit the capacity of the governments of developing nations to intervene in urbanization and ameliorate its negative consequences" (Roberts 1989, 670). Hence, the governments of non-core countries are left relatively defenseless against the ills of urbanization, because they need the financial support of developed countries.

Non-core countries underwent several patterns of urbanization. The variations in urbanization depended on two important factors: 1) the centralization of government and its ability to contest regionalism within its territory and 2) the "challenged" to the state posed by the proliferation of working classes. Both factors varied state to state and were equally vital to determining the urban transformation. Looking at Latin America and South Korea clearly illustrates the importance of these factors in creating differences in the urbanization processes. For instance, in Latin America, labor forces are far more organized and politically active than their Asian counterparts. Therefore, their states aid the urban classes through subsidies, union organizations and welfare programs. Hence, Latin America is a less desirable site for export assembly industry (670).

The new world economy has been largely characterized by the emergence of trade liberalization. During the ISI period of urbanization investment by multinational corporations focused on inward growth or the development of non-core countries’ internal markets. Since the early 1970’s, developed countries have demanded non-core countries to reduce the restrictions associated with foreign investment. International competition is consequently forcing developing nations to lift trade barriers, which previously encouraged internal economic development. Economic dependency has segwayed from the ISI period based on "internal and fragmented markets" to the current one based on global integration. The economic development fostered by multinational corporations seeks urbanization on a macro-global level, instead of focusing on the individual development of non-core countries.

One of the defining elements of the new world order is the mushrooming of intermediate cities. Export industrialization created a need for a range of cities with sufficient populations and adequate infrastructure. Export production companies have no need to locate in cities, because their business is not aimed at local markets, making ports and border cities more conducive venues to settle. Hence, the new mode of urbanization has witnessed migration from urban to alternative urban areas, vastly different from the rural to urban migration experienced during the ISI period. Significantly, urbanization levels are beginning to diverge, and countries without the adequate intermediate cities are failing to urbanize in the new world order.

The export industrialization characterizing the current period of urbanization has led to huge transformations in the labor market. The "policies of economic liberalism [have] led to a worldwide deregulation of labor" (678). International integration calls for the reduction of costs and increased competition of core and non-core countries. Hence, the shifting from import industrialization policies warranted the desertion of rent controls and food subsidies in developing countries. In Argentina, the loss of such amenities caused a reduction in real wages, while several low wages jobs were filled with migrant workers from Bolivia and Paraguay. The present period is witnessing an informal labor market, characterized by diminished economic opportunity. During the ISI period, the informal labor market represented an additional and more flexible employment opportunity for those included in the formal labor force. However, with export industrialization, an informal labor market loses its social and economic dynamic (681).

Another basic difference in the present period is the change in traditional family roles and expectations. The wages allotted during the ISI period were sufficient enough to enable a family to live off one income, primarily the man. Therefore, women were able to stay at home and children could attend school, without worrying about contributing to the family income. The new period of urbanization has forced a change in these defined roles, because the wages and benefits of one family member are not sufficient to support the entire family. The challenges of the new world order are invariable forcing families to collectively contribute to sustain.

Women and children have become a more integrated part of the wider society as they branch out into the working force. Consequently, they face several domestic difficulties in trying to meet their new found work obligations and familial responsibilities. Previously these communities turned to the state to provide welfare initiatives. However, the new strains placed on families by the export-industrialization policies are being addressed through communal responses. By replacing the state sponsored welfare programs, recent urban populations are diminishing the state’s power to regulate urban areas, effectively diluting state authority with self-sufficient entities.

The export industrialization driving the current period of urbanization is lamentable, according to Roberts. He concludes by explicating his argument clearly. First, intermediary cities are necessary for the success of the world economy. However, these cities are engrossed in problems further complicated by the large waves of migratory populations and political instability. Political groups are gathering in response to the social and familial problems, and as they become increasingly mobilized, they contribute to the urban volatility. Additionally, the erosion of welfare programs not only leads to increased poverty, but also further perpetuates the deterioration of state control. Urbanization requires an effective welfare-oriented state, to ensure regional development.

Roberts is cautious to definitively conclude. He recognizes the need for more extensive research, in both comparative non-core countries and historical periods of urbanization. He is careful to point out that these documented affects of export-industrialization may be a short-term phenomena.

The macroeconomics of a global system will benefit from the increased efficiency produced by the transformation of urbanization from ISI to export based industrialization. However the cost on a micro level, might in turn produce problems that will undermine the goals of international integration. There is sufficient evidence of over-urbanization to warrant a closer look at the growth in non-core countries. While world capitalism is fostering urbanization, we must consider it effects and wonder what kind of world system we are attempting to create. Increased poverty and marginalization of several non-core countries is a huge price to pay for a faster growing world economy.

Bryan R. Roberts, "Urbanization, Migration and Development", Sociological Forum,

Vol. 4, No. 4, Dec. 1989, pp. 665-691.